De Beers Revises Production Guidance To 25-27 Million Carats

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De Beers says it production guidance has been revised downwards in response to the coronavirus or COVID-19 which has affected global trade. In its production report for the first quarter of 2020, the diamond major noted that full year guidance is modified to between 25 and 27 million carats. 

“In response to the impact of COVID-19 on mining operations, wholesale trading activity and consumer traffic in key consumer markets, production guidance has been revised to 25-27 million carats (previously 32-34 million carats), subject to continuous review based on the disruptions related to COVID-19 as well as the timing and scale of the recovery in trading conditions,” the company report stated.

However, De Beers said rough diamond production during the period was in line with the prior year at 7.8 million carats, with limited impact from COVID-19 measures introduced at the end of the quarter in producer countries. 

In Botswana where most of its meat is, De Beers’ production decreased by 5% to 5.6 million carats, driven by a 7% decrease at Orapa due to challenges related to commissioning of new plant infrastructure and maintenance, while production at Jwaneng reduced by 4% due to planned lower grade.

In Namibia, production increased by 6% to 0.5 million carats due to planned higher grade at the marine operations the same as South Africa where it increased by 97% to 0.8 million carats as the final ore from the open pit is mined prior to transition to underground.

In Canada, production decreased by 19% to 0.8 million carats, primarily due to the closure of Victor, which reached the end of its life in Q2 2019. Gahcho Kué production increased by 4% to 0.8 million carats due to strong plant performance.

Rough diamond sales 

Rough diamond sales totalled 8.9 million carats (8.3 million carats on a consolidated basis)2 from two sales cycles, an increase compared to Q1 2019 (7.5 million carats from two sales cycles; 7.2 million carats on a consolidated basis)2, driven primarily by the fact that the early part of 2019 saw lower demand due to higher polished stocks. 

Sales volumes increased year-on-year despite adverse demand impacts in Q1 2020 from COVID-19, with customers given the option to defer some allocations in the second sales cycle, offset by a shift in demand towards lower value goods. The third sales cycle of 2020 was not held due to COVID-19-related restrictions on the movement of people and product, and customers were provided with flexibility to defer all their allocations from Sight 3 until later in the year.

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