De Beers Group, the world’s leading producer of rough diamonds by value, strategically scaled down production in the first quarter of 2024 to manage its inventory levels amidst the gradual recovery of the market.
Despite experiencing a significant drop in demand for rough diamonds globally in 2023, De Beers maintained its production guidance for that year, resulting in substantial stockpiling.
The global diamond industry faced a major decline in 2023 following strong demand in the preceding years.
Factors contributing to this decline included the sluggish post-pandemic economic recovery in China, increases in inflation and interest rates in the USA affecting consumer spending, competition from lab-grown diamonds (LGDs), and high midstream polished diamond inventories at the beginning of 2023..
In its production report for Q1 2024, De Beers disclosed a 23% decrease in rough diamond production to 6.9 million carats.
This reduction was primarily attributed to adjustments in production strategies aimed at addressing high inventory levels and anticipating a gradual recovery in rough diamond demand.
Production in Botswana, where De Beers operates major diamond mines through Debswana, declined by 28% to 5.0 million carats.
This decrease was driven by intentional lower production at Jwaneng and a temporary change in plant feed mix at Orapa to process existing surface stockpiles.
Namibia’s production remained relatively stable at 0.6 million carats, while South Africa saw a 19% decrease to 0.6 million carats due to the depletion of lower grade surface stockpiles.
In Canada, production decreased by 4% to 0.6 million carats due to planned treatment of lower grade ore. Despite the challenging market conditions, rough diamond demand began to recover in Q1 2024, particularly following improved demand for diamond jewelry in the United States during the year-end holiday season.
Rough diamond sales in Q1 2024 totaled 4.9 million carats, a decrease from 9.7 million carats in Q1 2023.
The consolidated average realized price increased by 23% to $201 per carat, reflecting a shift in the sales mix towards higher-value rough diamonds and the impact of price adjustments.
In response to market conditions and expectations for a gradual recovery, De Beers has revised its production guidance for 2024 to a range of 26β29 million carats, down from the previous range of 29β32 million carats.
This adjustment aims to address higher-than-average inventory levels in the market and align production with anticipated demand trends for the remainder of the year.
