DE Beers on Thursday slashed production guidance by as much as 40% to between 20 million to 23 million carats for the 2025 financial year.
The move recognises little chance of a major recovery in the diamond market this year continuing difficult conditions last year. De Beers will report “a marginally” negative Ebitda for the second half of its 2024 financial year (+$300m Ebitda in H1).
The company, 85%-owned by Anglo American, will also book an impairment in its 2024 numbers after “assessing the impact of diamond market conditions and general fall in demand in China”. Anglo is due to report its year-end financials on February 20.
De Beers is reported to be carrying a rough diamond stockpile worth as much as $2bn. Commenting on the stockpile, Anglo said it was reduced “slightly” last year, but there was no getting away from economic reality.
“At De Beers, difficult rough diamond trading conditions mean that we have reduced production guidance in 2025 and 2026 to reflect our focus on value, working capital efficiency and cash generation,” said Duncan Wanblad, CEO of Anglo. Previous production guidance was put at 30 and 33 million carats.
Wanblad was commenting in Anglo’s production update for 2024. “De Beers continues to monitor rough diamond trading conditions and will respond accordingly,” he said.
In the year under review, diamond production decreased 26% to 5.8 million carats. Anglo said this reflected “the proactive production response to the prolonged period of lower demand, higher than normal levels of inventory in the midstream and a continued focus on working capital”.
The diamond industry was pummelled by a 20% fall in the average rough price index. Consequently, De Beers reduced its own sales volumes about 28% and sold a larger proportion of higher value rough diamonds, increasing its average realised price for the year by 3% to $152 per carat.
De Beers’ rough diamond sales totalled 4.6 million carats in the fourth quarter (including two sights that were rolled into a single sales event), generating revenue of $543m. This compared to revenue of $230m in the fourth quarter of 2023 which also consisted of two sights in which 2.8 million carats were sold.
Anglo has announced plans to divest its stake in De Beers. Wanblad said in an interview on Monday that his preference was for a trade sale.
“I favour a trade sale based on sentiment. Trader buyers have more of a feel [for the market] than the public,” he said. “But as markets recover, the public might get a lot more confident. There’s an equal option for both,” he said of possibly spinning De Beers out as a listed company. “I definitely would not discount an IPO,” he said.
