Limited consumer demand & diamond growth in 2024

De Beers prepared on a consolidated accounting basis, except for production, which is stated on a 100% basis except for the Gahcho Kué joint operation in Canada, which is on an attributable 51% basis. In the row DeBeers also announced their outlook for Market & Operations here!

Operational outlook: 2025 guidance was reduced at the December investor update, reflecting the ramp-up profile at Venetia underground as well as deferral of an expansion project at Gahcho Kué (Canada) into 2026.

Venetia is processing lower grade surface stockpiles while the operation transitions to underground. This will continue as the underground production slowly ramps up following the first production blast in mid-2023. It is expected to ramp up to steady-state levels of c.4 million carats per annum (Mctpa) production over the next few years.

Near term unit cost will be impacted by a low carat profile from Venetia as the underground project ramps up and is subsequently expected to reach a steady-state of c.$75/ct from 2026.

These impacts are reflected in the three-year guidance provided at the December 2023 Investor Update presentation, which is unchanged. Production guidance for 2024 is 29–32 million carats (100% basis) and 2024 unit cost guidance is c.$80/ct. However, De Beers will assess options to reduce production in response to prevailing market conditions.

Market Outlook: Industry conditions are expected to remain challenging in the short term, but the long term outlook is favourable. Midstream and retail demand stabilised towards the end of 2023, but inventories of rough diamonds reportedly grew at producers globally. Over the course of 2024, assuming a measured approach from producers to the release of upstream inventory, the high midstream inventory levels seen in 2023 are expected to decline as retailers replenish their stocks.

Limited consumer demand growth and ongoing retailer caution are anticipated ahead of an expected return to growth into 2025.

The ongoing focus on diamond provenance – especially given the expected introduction of Russian diamond import restrictions by G7 nations – has the potential to reinforce demand for De Beers’ rough diamonds, supported by the blockchain Tracr platform. The global supply of rough diamonds is anticipated to continue to decline owing to the maturity of major mines and limited new discoveries. The wholesale prices of lab-grown diamonds are falling sharply, leading to financial challenges at some leading lab-grown diamond producers. These price declines are expected to lead to further substantial reductions in retail prices (with De Beers’ Lightbox brand testing significantly lower prices for its products). This will further reinforce consumers’ understanding of the fundamental differences between lab-grown and natural diamond jewellery.

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