De Beers' rough diamond output up 6.29% in H1

Processors restocking takes price up 6%, future uncertain due to volatility in rupee

De Beers, one of the world’s largest diamond miners posted 6.29% increase in its rough diamond production in the first half of the current calendar year.

Total rough diamond output of De Beers, a unit of global mining giant Anglo American, shot up to 14.295 million carats during the first half of 2013 as compared to 13.449 million carats in the comparable period last year.

Philippe Mellier, CEO of De Beers Group, attributed the higher rough diamond production to improved ore grades at Orapa and Jwaneng Mines.

Sales remained steady during the first half of the current calendar year, with total sales of $3.3 billion ($3.3 billion) and rough diamond sales of $3 billion (3 billion).

After a 12% decline in De Beers’ rough diamond prices during the second half of 2012, prices increased by 6% in the first six months of 2013. The realised average price to June 2013 was 2% higher than for the same period 2012, driven by an improved product mix, more than offsetting the lower price index.

In South Africa, Venetia mine was impacted by the heavy flooding in the Limpopo province in January, but ore mining shortfalls were mitigated through the processing of ore stockpiles. Restoration of full operations is expected during the second half of 2013.

In Canada, work continues on optimising the Snap Lake Mine to enable economic access to the promising, though challenging, orebody. A 16-day winter road blockade during February 2013 near Victor mine was eventually removed when an interlocutory court injunction was granted. The Mine continued to operate at full production during the blockade.

In Namibia, production has increased at both Namdeb and Debmarine Namibia operations.

Talking about demand trend, Mellier said, retailer results for the early part of 2013 were mixed in the key consumer markets. The USA exhibited encouraging growth. Growth in China continued though at a slower pace and was somewhat patchy. Polished prices edged up on the back of moderate retailer re-stocking, but high cutting centre stock, tight midstream liquidity and a weakening rupee continued to create challenges for the rough market.

“Looking forward, while the market continues to experience volatility and macro-economic uncertainty, we remain cautiously optimistic that the growing strength exhibited in the polished market, particularly in the USA, will translate to overall global growth for the year. In the longer-term, the fundamentals of the industry remain strong, as growing demand will continue to outpace flat to declining production,” he added.

With full recovery from the Jwaneng slope failure and Venetia mine flooding expected during the second half, De Beers continues to anticipate full-year production will recover to be broadly in line with 2012 subject to market conditions. De Beers expects moderate growth in diamond jewellery demand in the remaining six months of 2013, supported by improving sentiment in the US market and continued growth in China, albeit at a lower rate. Conditions in India and Japan remain more uncertain due, in part, to the continuing volatility of their currencies, which is expected to affect growth in US dollar terms. Overall, despite the fragility of the global economic recovery, macro-economic conditions are generally supportive of global growth in the polished diamond market in 2013 at levels slightly above 2012.