DE Beers will go ahead with a planned $1bn investment to extend the life of its flagship Jwaneng mine in Botswana, said Reuters citing the diamond firm’s CEO Al Cook.
The investment would proceed even as the 2023 downturn in gem demand persisted, the newswire added.
The Anglo American unit and the Botswana government, which jointly own Debswana Diamond Company, have approved the spending that will convert the Jwaneng pit into an underground operation, said Reuters.
Debswana said in 2018 it planned an investment to extend the lifespan of the mine by 11 years from 2024. De Beers said the spending is necessary as long-term supply of rough gems is expected to tighten.
“The global supply of natural diamonds is falling, so moving forward with the Jwaneng underground project creates new value for investors,” Cook said. “This investment is aligned with our strategy to prioritise investments in the highest-quality projects,” he said.
Diamond prices were reduced last year as it became clear the midstream of diamond cutters and polishers were swamped with inventories. De Beers’ diamond sales shrank to $80m for De Beers’ penultimate sales cycle for 2023. This was despite the US market, which comprises half of the world’s diamond jewellery retail sales, faring relatively well during this period.
In addition to inventories the expected take-off of diamond jewellery sales in China, where De Beers has big hopes, failed to materialise.
Paul Zimnisky, an independent diamond analyst, told Miningmx last year Chinese consumer purchases increased to $13.5bn from under $10bn coming out of the pandemic, but they had retracted to about $13bn in 2022.
Higher rates and weaker growth could also put the consumer under pressure this year resulting in less diamond demand and downward pressure on prices, said Bank of America in a report. It expected slower price recovery amid a near term outlook coloured by mid-stream destocking, the risk of recession in the US and the existential threat posed by lab-grown diamonds.
“Eventually a consolidated supply side and producer discipline puts a floor under prices. V shaped recovery? Remains to be seen,” the bank said.