Anglo American, the parent company to De Beers, has revised down its diamond production target for 2019 on the back of planned processing of exiting ore from the Venetia open pit in South Africa. The company added in its preliminary results for 2018 that this year’s global diamond jewellery consumer demand faces a number of headwinds, including the risk of a potential intensification of US-China trade tensions. “Production in 2019 is expected to be in the range of 31-33 million carats, subject to trading conditions,” Anglo said in a statement accompanying the results.
“The lower production is driven by the planned process of exiting from the Venetia open pit, with the underground operation becoming the principal source of ore from 2023. Associated with this, an increased proportion of production in 2019 is expected to come from De Beers Group’s joint venture partners, a proportion of which generates a trading margin, which is lower than the mining margin generated from own-mined production.”
In 2018, rough diamond production increased by 6% to 35.3 million carats (2017: 33.5 million carats), which was in the lower half of the production guidance range of 35-36 million carats. In Botswana, where most of De Beers is (Debswana), production increased by 6% to 24.1 million carats (2017: 22.7 million carats). The company said production at Jwaneng was flat, as the effect of processing planned lower grades was offset by a 12% increase in plant throughput. At Orapa, a 13% increase in output was driven by higher plant utilisation and the full effect of the successful restart of the Damtshaa operation.
Anglo results showed that Namdeb Holdings’ production increased by 11% to 2.0 million carats (2017: 1.8 million carats). Production from the marine operation increased by 4%, driven by fewer in-port days for the Mafuta crawler vessel and the adoption of a technology-led approach for optimising the performance of the drill fleet. Production at the land operations increased by 34% to 0.6 million carats (2017: 0.4 million carats) as a result of access to consistently higher grades, despite placing Elizabeth Bay onto care and maintenance in December.
In South Africa (DBCM), production decreased by 10% to 4.7 million carats (2017: 5.2 million carats), owing to a period of suspended production at Venetia following a fatal incident, as well as lower run-of-mine ore grades experienced as the mine approaches the end of the open pit. “Output was also affected by the placing of Voorspoed onto care and maintenance in the fourth quarter in preparation for closure.”
In Canada, production increased by 19% to 4.5 million carats (2017: 3.8 million carats) due to the full year contribution from Gahcho Kué, which entered commercial production in March 2017, and higher grades at Victor. Victor is due to cease production in the first half of 2019, when the open pit is expected to have been depleted.
“Although current economic forecasts remain positive, the outlook for 2019 global diamond jewellery consumer demand faces a number of headwinds, including the risk of a potential intensification of US-China trade tensions, the Chinese government’s ability to rebalance economic growth towards consumption, and further exchange rate volatility,” Anglo said.