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A crack in the diamond

A crack in the diamond
STRUGGLING: The Diamond sector will have to dig deep

Industry confirms disastrous six months

De Beers Group have confirmed what everyone feared: the diamond industry has suffered a disastrous first half of the year.

With Covid-19 bringing the world to a standstill for much of 2020, De Beers have been hit hard.

The mining giant’s total revenue for the opening six months of the year dropped by a staggering 54 percent to US$1.2 billion.

In that time, the company registered $1 billion in rough diamond sales compared to $2.3 billion in the same period last year.

Additionally, the pandemic has led to a drastic decrease in average diamond prices, falling by 21 percent to $119 per carat.

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Addressing local media recently, De Beers Group Executive Vice President – Diamond Trading, Paul Rowley described Covid-19’s impact on the global economy as ‘unprecedented’.

He revealed that all parts of the diamond value chain were temporarily halted due to global lockdown measures, from exploration to mining, rough diamond sales, manufacturing and retail.

During the first half of the year, De Beers, which gets most of its rough diamonds from Debswana, experienced a 27 percent decline in production to 11.3 million carats due to lockdowns in Southern Africa.

Despite the lower production, the group has announced its unit costs remained flat due to cost saving measures introduced across the business in response to the challenges.

In Botswana, rough diamond production fell by 36 percent, from 11.3 million carats mined in the first half of 2019 to 7.5 million carats due to the nationwide lockdown which ran from 2 April to 18 May.

At the Jwaneng Mine, production dropped by 34 percent to 4.3 million carats from 6.6 million carats whereas production at Orapa Mine fell by 39 percent, from 5.1 million carats to 3.1 million carats.

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However, with economies gradually reopening, De Beers is hoping for a better second half of the year. Indeed, the diamond group says it is already seeing a strong rebound in China and positive early indications from the United States, despite the superpower’s on-going Corona struggles.

While uncertainty remains due to fears of a second wave of the virus, De Beers is alive to the potential challenges this poses but is hopeful the industry will recover in the not-so distant future.

“The medium and long-term outlook for the diamond industry is positive and we are focused on leading the sector’s recovery,” stressed Rowley.

The widespread economic disruption caused by the virus has forced many businesses to come up with innovative measures to stay afloat.

Although they remain a leading player in the diamond industry, De Beers has revealed its plans to transform its business.

The group believes its transformation strategy will ensure the business remains in the best possible position to capitalize on opportunities and to generate benefits for its partners.

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