De Beers, the world’s largest diamond mining company, reported a drop in revenue in the first half of 2023, despite continued macroeconomic challenges and a significant inventory build-up in the midstream.
The company’s total revenue for the six months ending 30th June 2023 fell 22% year on year to $2.8 billion, with rough diamond sales down 24% to $2.5 billion due to a softening in demand.
Total raw diamond sales volumes of 15.3 million carats were in line with the prior-year period, owing to a higher proportion of lesser value rough diamonds sold in 2023, according to the report. This had an impact on the average realised price in the first half of the year, which fell by 23% to $163/ct versus $213/ct last year, reflecting Sightholders’ more cautious attitude to arranging their 2023 allocation timetable due to the uncertain macro-economic outlook, according to De Beers.
The average rough diamond price index fell by 2%, reflecting a general slowdown in consumer demand for diamond jewellery and a buildup in midstream rough diamond inventories.
According to the numbers, De Beers‘ H1 rough diamond production fell slightly to 16.5 million carats, down from 16.9 million carats in the same time previous year. Notably, due to the anticipated move to underground operations, South Africa suffered a dramatic 59% fall in production to 1.2 million ct. However, Botswana and Namibia showed encouraging trends, with production increasing by 9% to 12.7 million ct and 21% to 1.2 million ct, respectively, due to planned treatment of higher-grade ore and development of mining regions.
Demand for raw diamonds fell as polished diamond stockpile levels soared in the midstream in the start of 2023. The anticipated increase in Chinese demand following the relaxation of Covid-19 limits was foiled in the first quarter by a new wave of infections, which dampened consumer confidence. The problem was aggravated further by declining commodity prices and increasing financing expenses, putting profitability at risk, according to the company.
De Beers stated that its strong focus on underlying demand for branded diamond jewellery, particularly in major markets such as China, has resulted in positive growth in the wedding and collection areas.
Capital spending at De Beers climbed by 21% to $302 million, owing mostly to investment in the Venetia underground project and continued life-extension activities.
De Beers anticipates adverse macroeconomic conditions that may impact consumer expenditure on diamond jewellery in the future. Its own consumer research, on the other hand, confirms the long-term viability of diamond demand in important regions. “The global supply of rough diamonds is expected to decline due to limited new discoveries, which is expected to support natural diamond value growth potential,” it said.
As De Beers plots its course for the future, the business recently revealed intentions to improve diamond provenance via the TracrTM blockchain platform. This programme strives to give consumers a clear picture of a diamond’s journey, building trust in the authenticity and ethical sourcing of natural diamonds.
The business forecasts 30-33 million ct of output in 2023, with a unit cost of around $75 per ct.