De Beers, the world’s largest diamond producer by value, has reported a decline in rough diamond sales for the second time this year.
The Anglo American unit recorded provisional sales of $315 million, down from $383 million in the previous cycle and $456 million during the same period last year.
The company attributed the drop to the quieter summer period, but analysts suggest that the diamond market continues to struggle.
BMO analyst Colin Hamilton noted, “With the key China market struggling amid renewed graft investigations, we don’t expect to see much evidence of recovery during 2024.”
De Beers’ CEO Al Cook echoed this sentiment, stating, “The recent annual JCK jewelry show in Las Vegas confirmed a resurgence in retailers’ interest in natural diamonds in the United States, but ongoing economic growth challenges in China mean we continue to expect a protracted U-shaped recovery in demand.”
Parent company Anglo American, which recently fended off a takeover attempt by BHP, is in the process of selling its 85% stake in De Beers.
Announced in May, this decision is part of a major restructuring amid declining sales, a sluggish global economy, and the rise of lab-grown diamond alternatives.
In preparation for the split, De Beers plans to discontinue the sale of man-made stones, ending a six-year experiment with its lab-grown diamond jewelry brand, Lightbox.
While the sale of Lightbox stones will not cease immediately, the unit will be reviewed once the current inventory is depleted, expected to take about a year.
De Beers is targeting annual core profits of $1.5 billion by 2028. Last year, the business made just $72 million, although traditionally its profits have ranged between $500 million and $1.5 billion, reflecting the diamond industry’s cyclical nature.
With Anglo American set to exit, De Beers appears poised to operate independently, as it did for most of its 136-year history.
Anglo American acquired a majority stake in De Beers 13 years ago. The government of Botswana, which holds the remaining shares, recently stated its intention to increase its stake and play a central role in selecting a new investor to replace Anglo American.
