De Beers says “seasonal trends” behind sixth cycle diamond sales slump

Al Cook, CEO, De Beers

ROUGH diamond sales weakened in De Beers’ sixth sales cycle which the firm’s CEO Al Cook put down to “seasonal trends”.

The Anglo American-controlled firm said sales amounted to $410m, down on $450m in sales for the previous cycle and about a third lower than sales of $638m reported for the corresponding cycle in 2022.

“In line with seasonal trends, rough diamond sales continued at a lower level during the sixth sales cycle of the year,” said Cook in a company announcement today. “Participants in the diamond industry’s midstream sector continue to take a cautious approach to purchases in light of ongoing macroeconomic challenges.”

Morgan Stanley said the sixth cycle was seasonally quieter and that the sales number was in the middle of De Beers’ five-year average range. But the bank added: “The statement made no reference to expectations of a recovery during the remainder of the year”.

Anglo was expected to report a decline in earnings before interest, depreciation and amortisation from its stake in De Beers falling to $900m in the 2023 financial year – about 15% of Anglo’s total Ebitda of $12.7bn – compared to $1.4bn from diamonds in 2022.

Anglo, which is due to report its interim figures on Thursday (27 July), might face questions about the suitability of a diamond business in its portfolio of minerals predominantly focused on supply electric mobility and renewable energy. “While management has argued there remains a place for a diamond business in a portfolio centred on future-facing commodities, we question the presence of diamonds in a business enabling the energy transition,” said German bank Berenberg in a recent report.

De Beers sold a total of $6bn worth of rough diamonds in 2022 compared with $4.9bn in 2021 consisting of 30.4 million carats (2021: 33.4 million carats). The group is forecasting production for 2023 of between 30 million and 33 million carats “subject to trading conditions”.