De Beers posts best first cycle sales in two years as diamond industry recovery begins

Bruce Cleaver, CEO, De Beers

STRONG diamond jewellery sales during the year-end holiday season contributed towards a $99m improvement in year-on-year first cycle rough diamond sales, said De Beers, the 85%-owned Anglo American company.

The company today reported provisional sales of uncut diamonds of $650m which compares to sales of $551m in 2020’s first cycle. Sales for the tenth and final sales cycle of 2020 came in at $452m.

De Beers said it had implemented a flexible approach to rough diamond sales as per previous cycles, extending the sales period to longer than the customary week, in order to accommodate buyers tackling Covid-19 restrictions.

Nonetheless, this was the highest number recorded for the first sight since Jan 2018, according to a report by Goldman Sachs.

“These numbers confirm the ongoing demand recovery in the diamonds market,” the bank said. “We are ‘Buy’ rated Anglo American and expect the firm to generate $4.4bn of revenue from diamond sales in 2021 up from an expected $2.9bn for 2020,” it added.

Bruce Cleaver, CEO of De Beers, said the midstream – cutters and polishers, as well as diamond traders – started the year with low levels of rough and polished inventories which helped fuel first cycle demand as they restocked. Sales of rough diamonds are also being supported by expected demand ahead of Chinese New Year and Valentine’s Day.

But he remained cautious on the longer-term outlook for diamonds, stopping short of calling a full-blown recovery. “While risks to recovery as a result of ongoing restrictions on the movement of both people and goods persist, we have been encouraged by demand conditions,” said Cleaver.

Commenting in its production report published earlier this month, Anglo said diamond production had fallen 14% year-on-year in the quarter to 6.7 million carats. This was owing to planned reductions in response to lower demand which had been affected by Covid-19 disease. There were also operational challenges at Orapa in Botswana, it said.

Diamond production guidance for 2021 has been adjusted to between 32 to 34 million carats compared to guidance of 33 to 35 million carats previously.