De Beers’ Third Sight Of 2016 Generates $660 Million

Rough diamonds from Debswana mines (Pic By De Beers)

Rough diamonds from Debswana mines (Pic By De Beers)

De Beers said there is a growing diamond demand this year as compared to the close of 2015—with the Anglo American unit reporting a third consecutive rise in sales. The company, with most of its meat in Botswana, announced that its rough diamond sales for Cycle 3 of 2016 that took place in February generated $660 million as opposed to $617 million in February.   

De Beers stated that the continued stability in polished diamond prices and sales of polished diamonds at the wholesale level supported a reasonably positive environment for rough diamond demand for the third consecutive sales cycle.

“So far, 2016 has seen significantly stronger rough diamond demand than that experienced at the end of 2015 as the actions taken by the industry continue to have a positive effect,” company Chief Executive, Philippe Mellier said.

“However, we are now moving into a part of the year where rough diamond demand has historically been lower as a result of seasonality, so we continue to adopt a prudent mind-set,” he added.

The global demand for polished diamonds started to fall in the second half of 2014 prompted by a slowdown in China’s economy and signaling a reversal from a period of high growth (which had led to overly optimistic market expectations).

This, together with a slowdown in other markets, led to an accumulation of inventories of polished diamonds and lower demand for rough diamonds. Between mid-2014 and September 2015, prices for polished and rough diamonds decreased by 12 and 23 percent respectively. Consequently, major producers started cutting production beginning in the second half of 2015.

In Botswana, De Beers reduced production by about 20 percent in 2015 and announced further cuts for 2016. Debswana — the 50/50 joint venture between De Beers and the government of Botswana—put its Damtshaa mine on care and maintenance status and plans to scale down production at the Orapa 1 mine for the period 2016-2018.  

According to De Beers, Cycle 3 2016 provisional sales value represents sales as at 11 April 2016 while Cycle 2 2016 actual sales value is restated following the earlier publication of a provisional figure for the second sales cycle of 2016.

The sales value is quoted in terms of sales by De Beers Global Sightholder Sales and De Beers Auction Sales, and reported on a consolidated accounting basis. Auction Sales included in a given cycle are the sum of all sales between the end of the preceding cycle and the end of the noted cycle.

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