Diamond miner De Beers has revised its production targets for the new year on the back of many difficulties the industry is facing and lower output from one of its operating mines. When announcing Production Report for the Fourth Quarter of 2020, the company noted that the guidance has been lowered to 32-34 million carats from the previous figure of 33-35 million carats.
“Production guidance(1)is revised to 32-34 million carats (previously 33-35 million carats) (100% basis), subject to trading conditions, due to ongoing operational challenges and lower expected production from the final cut at Venetia,” De Beers said.
According to a report by The Kimberley Process Civil Society Coalition (KPCSC), the diamond sector has been hit hard by the coronavirus pandemic. KPCSC said the devastation is felt across the supply chain, not the least in various African countries that depend on this precious mineral in their socio-economic development.
“To curb the spread of COVID-19, countries announced wide-ranging measures. Borders were closed across the continent for travel, with the movement of goods delayed at best. Interurban and intercity movements were banned in most countries. Lockdown measures were imposed, ranging from complete shutdowns to various restrictions on the movement of people and operation of businesses. Mining, as an essential industry for domestic resource mobilization, was mostly exempted from lockdown regulations, albeit subject to specific sanitary and distancing measures.”
Meanwhile, De Beers added its rough diamond production in the Fourth Quarter of 2020 decreased by 14% to 6.7 million carats. It said this was driven by continued planned reductions in response to the lower demand for rough diamonds caused by the COVID-19 pandemic and operational challenges at Orapa that led to lower than expected production. COVID-19 related measures remain in place to safeguard the workforce while maintaining operational continuity.
In Botswana, production decreased by 28% to 4.3 million carats, driven by the planned treatment of lower grade material at Jwaneng, where production decreased by 56%. This was partly offset by a 9% increase at Orapa due to a planned improvement in grade, despite a slower than anticipated plant restart in December following scheduled maintenance, as well as power supply interruptions affecting plant availability.
Namibia production decreased by 26% to 0.3 million carats as the majority of the marine fleet remobilised during Q4, following the Q3 stoppage.
South African production increased to 1.3 million carats due to the expected improvement in ore grade from the last cut of the open pit at Venetia as the mine continues to transition to underground operations.
Production in Canada decreased by 23% to 0.8 million carats, as maintenance resulted in lower plant throughput.
Demand for rough diamonds showed positive trends in the fourth quarter of 2020, and the indications are that encouraging levels of consumer demand for diamond jewellery continued during the holiday season in the US, while China also performed well. Rough diamond sales totalled 6.9 million carats (6.4 million carats on a consolidated basis)(2) from two sights, compared with 6.6 million carats (6.5 million carats on a consolidated basis)(2)from three sights in Q3 2020, and 7.0 million carats (6.6 million carats on a consolidated basis)(2)from two sights in Q4 2019.
The full year consolidated average realised price decreased by 3% to $133/ct (2019: $137/ct), as a 10% reduction in the average rough price index was partly offset by an increased proportion of higher value rough diamonds sold in 2020.