De Beers Group CEO, Philippe Mellier
De Beers says its half-year production increased while sales were steady and said it anticipates that its full-year production will recover to be broadly in line with 2012 subject to market conditions.
The South African company said production increased by nearly one million carats to 14.3 Mct (30 June 2012: 13.4 Mct) owing to improved ore grades at Orapa and Jwaneng Mines. Progress on the remediation programme following the Jwaneng mine slope failure that occurred in June 2012 continues, with full resolution expected in the third quarter of 2013.
On the other hand, sales remained steady during the first half, with total sales of $3.3 billion (30 June 2012: $3.3 billion) and rough diamond sales of $3.0 billion (30 June 2012: 3.0 billion). After a 12% decline in De Beers’ rough diamond prices during the second half of 2012, prices increased by 6% in the first six months of 2013. The realised average price to June 2013 was 2% higher than for the same period 2012, driven by an improved product mix, more than offsetting the lower price index.
De Beers Group CEO, Philippe Mellier said during the first half of 2013, the company saw encouraging signs of stability and moderate growth in the major diamond consumer markets of the USA and China while polished diamond prices have increased slightly during the period, trading conditions remained challenging for our rough market partners.
He said in the first half of 2013, De Beers’ rough diamond prices recovered some of the losses experienced in second half of 2012, with an improved product mix offsetting the lower price index.
“We made good progress in our production, with improved grades at our two biggest mines, Jwaneng and Orapa. The remediation of last year’s slope failure at Jwaneng, and the de-watering of the Venetia pit that was flooded earlier this year, are both now largely completed. De Beers continues to secure long-term production with the progression of three core projects across Botswana, South Africa and Canada,” Mellier said.
“De Beers continued to improve its safety performance during the first half of 2013, with a further decrease in our lost time injury frequency rate. However, while we did not experience any losses of life on De Beers’ operations, we are deeply saddened by the deaths of two employees and one community member in off-site vehicular accidents. We are studying ways to reduce the risk posed by road transportation, and my deepest sympathies go out to the families and friends of those who have died,” he added.
Mellier also updated that the relocation of our London-based sales function to Botswana is progressing on schedule, and ‘we look forward to hosting our first Sight from our new facility in Gaborone later this year. Further downstream, Forevermark and De Beers Diamond Jewellers continue to build strong brands and expand in areas of market opportunity’.
“Looking forward, while the market continues to experience volatility and macro-economic uncertainty, we remain cautiously optimistic that the growing strength exhibited in the polished market, particularly in the USA, will translate to overall global growth for the year. In the longer-term, the fundamentals of the industry remain strong, as growing demand will continue to outpace flat to declining production”.
Giving country performance, De Beers said the South Africa’s Venetia mine was impacted by the heavy flooding in the Limpopo province in January, but ore mining shortfalls were mitigated through the processing of ore stockpiles. Restoration of full operations is expected during the second half of 2013.
In Canada, work continues on optimising the Snap Lake Mine to enable economic access to the promising, though challenging, ore body. A 16-day winter road blockade during February 2013 near Victor mine was eventually removed when an interlocutory court injunction was granted. The Mine continued to operate at full production during the blockade.
In Namibia, production has increased at both Namdeb and Debmarine Namibia operations. After a challenging start to 2013, Element Six experienced slightly stronger sales momentum in the second quarter with improved market conditions across the Abrasives and Technologies business areas, combined with the introduction of new Element Six product innovations, and new Technologies’ capacity coming online.
In Botswana, infrastructure at the Jwaneng mine Cut-8 extension project is now complete. Within the current life of mine plan, Cut 8 will provide access to an estimated 86 Mt of ore to be treated yielding 102 Mct of high quality diamonds, and extend the life of mine of the world’s richest diamond mine to at least 2028.
