De Beers upbeat despite Covid-19

SHARE   |   Friday, 07 August 2020   |   By Bakang Tiro
De Beers Executive Vice President Diamond Trading-Paul Rowley De Beers Executive Vice President Diamond Trading-Paul Rowley

Blue chip giant diamond dealing company, De Beers Group’s rough diamonds sales declined significantly to $1 billion in 2020 as compared to $2.3 billion recorded in June 30, 2019 period.

The Group revealed during announcement of its 2020 Interim financial results on Thursday that its total revenue shrank by 54% to $1.2 billion (30 June 2019: $2.6 billion).

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Rough diamond sales volumes decreased by 45% to 8.5 million carats (30 June 2019: 15.5 million carats) due to the significant impact of Covid-19 on the global diamond industry.

De Beers Executive Vice President Diamond Trading-Paul Rowley said the decline in business is attributable to the Covid-19 pandemic. The outbreak of Covid-19, he said, led to immense decline in diamonds demand in key markets.

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Rough diamond sales have also been materially affected by lockdowns and travel restrictions especially in Southern Africa region, delaying the shipping of rough diamonds into cutting and trading centres and preventing buyers from attending the sales events,” Rowley underscored.

Meanwhile, the Group says China market has seen strong diamond jewellery sales post-lockdown, with sales for May and June respectively above those for the comparable periods of last year.

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Underlying EBITDA decreased to $2 million (30 June 2019: $518 million) owing to the impact of the considerably lower sales volumes and the lower rough price index reducing margins in both the mining and the trading businesses. Unit costs were flat compared with the first half of 2019 due to cost-saving measures and the favourable exchange rates,” the group announced.

In Botswana, production was 36% lower at 7.5 million carats as compared to 11.7 million carats mined on 30 June 2019, with the fall driven by a lengthy nationwide lockdown from 2 April to 18 May.

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Botswana mining operations also suffered a blow as the production levels at Jwaneng mine fell by 34% to 4.3 million carats as compared to 6.6 million carats mined in June 30 2019 due to a shutdown.

Production at Orapa fell by 39% to 3.1 million carats (30 June 2019: 5.1 million carats) due to the lockdown impact, including contests related to commissioning of new plant infrastructure.

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De Beers says the Botswana mining operations restarted from mid-May, with production targeted at levels to meet the lower demand. According to Rowley, the Group focuses on keeping its business resident despite the challenges, noting that this would be underpinned by its long existence in the game spanning 134 years.

“We are confident that that we will recover from the devastating impact brought by Covid-19. Mainland China market has shown signs of a strong recovery as stores have returned to normal operating hours. We also put in place other alternative diamonds viewing sites,” Rowley added.

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The current market outlook, however, according to the Group is highly uncertain owing to the possibility of a second wave of Covid-19 infections, with most countries still highly affected.  



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