THE onset of the Covid-19 pandemic accelerated De Beers’ plans to transform – a process that was “ongoing”, the group said today.
“The wide-ranging effects of the pandemic accelerated the trends that had already been identified, as well as the need to progress the transformation process in the short-term, so that the business is positioned to thrive for the long-term,” an Anglo American spokesman said in a response to an e-mailed request for an update.
Anglo American owns 85% of De Beers.
“As part of its business transformation process, De Beers is looking at all elements of its cost base, and a reduction in employee numbers is a potential outcome. The review and process of consulting with employees is ongoing, so we will continue to engage with our people before making any external statements,” it said.
Mark Cutifani, Anglo American CEO, said in July that De Beers management was “… working through issues with staff” regarding restructuring the company. “The whole strategy has been thought through quite well and we will articulate that in the next couple of days,” said Cutifani. He declined at that time to say if jobs would be affected.
The diamond market has been heavily affected by travel restrictions as countries globally either close borders or impose quarantine regulations on international arrivals.
De Beers sold $56m in rough diamonds in the second quarter, a 96% decline from sales a year earlier. The outcome for the first six months of the year was that the company made only a slim $2m contribution to Anglo’s earnings before interest, tax, depreciation and amortisation of $3.4bn.
There are signs of recovery: De Beers’ sales for the sixth and seventh cycles came in at £116m and £320m respectively. This demonstrated that demand for rough diamonds was reviving, said De Beers CEO, Bruce Cleaver earlier this month.
“Overall industry sentiment has become more positive as jewellers in the key US and Chinese consumer markets gained confidence ahead of the important year-end holiday season, supported by strong bridal diamond jewellery demand across markets,” he said.
The company had adopted a process of “near continuous sales” in order to accommodate the market. Other diamond producers have signed exclusive supply deals with cutters and manufacturers in which the realised polished price is shared.