DE BEERS plans to suspend production at its Venetia mine in South Africa for two years, as the diamond producer battles one of the toughest downturns in the industry’s history, said Bloomberg News on Monday.
The company the shutdown forms part of a wider cost-cutting drive and would not affect overall output targets, since production would be increased at other operations to compensate.
The $80bn diamond industry has been under sustained pressure, with a post-pandemic slowdown compounded by weaker Chinese luxury spending and growing competition from lab-grown stones. Trade tensions and conflict in the Middle East have added further strain.
De Beers has already cut production in an attempt to prop up prices, but an oversupply of diamonds from Angola combined with soft demand has continued to weigh on the market, said the newswire.
The Venetia decision comes as De Beers faces a period of considerable uncertainty. Its long-standing owner, Anglo American is in advanced talks to sell the business, following years of disappointing returns that have tested investor patience.
However, that process is not going smoothly. Former De Beers CEO Bruce Cleaver, who had been leading one of the bidding consortiums, said on Monday he was withdrawing his group’s interest from buying the diamond miner.
“I think that with the state of the business and the state of the diamond market it felt like it was difficult to see an appropriate return on investment over the short term,” Cleaver told Currency, a Miningmx sister publication.
“I do believe in the diamond industry, and I do believe in the long-term future of De Beers, but it felt for me and my funders at the time that this was not an appropriate time to continue,” he added.
That leaves Gareth Penny, another former CEO of De Beers, as outright favourite to buy the company. Penny’s bid, backed by major diamond trading companies, would refocus De Beers on mining and marketing natural stones, according to earlier reports.
Penny ran the company for five years before departing in 2010, steering it through the global financial crisis by idling mines and raising $1bn in a rights offer.
