De Beers Revises Production Guidance for 2020

Gaborone: Providing its quarterly production update for Q1 2020, De Beers said that total production for the period at 7,750,000 carats was virtually flat – only lower by 1% – over the Q1 2019 total production of 7,852,000 carats.

“Rough diamond production was in line with prior year at 7.8 million carats, with limited impact from COVID-19 measures introduced at the end of the quarter in producer countries,” the Company stated.

Production of De Beers’ Mines in Botswana was lower by 5% to 5.6 million carats. This was driven by a 7% production dip at Orapa “due to challenges related to commissioning of new plant infrastructure and maintenance”; and a 4% decrease at Jwaneng “due to planned lower grade”.

In Namibia production increased by 6% to 0.5 million carats “due to planned higher grade at the marine operations”, the Company said.

South Africa increased production by 97% to 0.8 million carats “as mining of the final ore from the open pit commenced prior to transition to underground”.

In Canada, production fell by 19% to 0.8 million carats, “primarily due to the closure of Victor, which reached the end of its life in Q2 2019”. However, Gahcho Kué production increased by 4% to 0.8 million carats due to strong plant performance.

The Company announced that a total of 8.9 million carats (8.3 million carats on a consolidated basis) were sold in the period in two sales cycles. This marks an increase from sales in Q1 2019 of 7.5 million carats from two sales cycles; 7.2 million carats on a consolidated basis, “driven primarily by the fact that the early part of 2019 saw lower demand due to higher polished stocks”.

“Sales volumes increased year-on-year despite adverse demand impacts in Q1 2020 from COVID-19, with customers given the option to defer some allocations in the second sales cycle, offset by a shift in demand towards lower value goods,” De Beers stated. “The third sales cycle of 2020 was not held due to COVID-19-related restrictions on the movement of people and product, and customers were provided with flexibility to defer all their allocations from Sight 3 until later in the year.”

Needless to say, as a result of the impact of COVID-19 on mining operations, wholesale trading activity and consumer traffic in key consumer markets, the Company’s production guidance has been revised to 25-27 million carats from the previously announced 32-34 million carats. This too is subject to “continuous review” of the disruptions related to COVID-19 as well as the timing and scale of the recovery in trading conditions.