De Beers has released its third quarter production report, which includes several significant insights:
1. Significant Decrease in Rough Diamond Production
In the third quarter of this year, De Beers produced 5.566 million carats of rough diamonds, marking a decrease of about 25% compared to the same period last year (7.408 million carats) and a 14% drop from the previous quarter. For the first three quarters of 2024, the total rough production was 18.878 million carats, down by about 21% from 23.928 million carats in the same period of 2023.
The report attributes the decline in production to the prolonged sluggish demand, elevated midstream inventory levels, and a focus on managing operating capital. Notably, South Africa, which represents a smaller share of production, saw a 41% increase in output this quarter (about 500,000 carats), mainly due to accelerated underground mining at Venetia.
The production guidance for 2024 remains between 23 to 26 million carats. However, due to high midstream inventory levels and the need for a longer market recovery, De Beers is "evaluating the possibility of reducing production" in consultation with its partners.
2. Significant Adjustment in Rough Diamond Sales
Due to elevated inventory levels in the midstream and prolonged weak consumer demand in China, trading conditions in the third quarter remained challenging. In response, the seventh and eighth Sight events were combined into a single sale, and the revenue will be reported in the fourth quarter.
As a result, only one Sight was held in the third quarter of 2024, with a total of 2.1 million carats sold, generating $213 million in revenue. By comparison, three Sights were held in the third quarter of 2023, yielding 7.4 million carats and $899 million in revenue.
3. Increase in Average Rough Prices and Decline in Price Index
The average price of rough diamonds sold by De Beers in this quarter increased by 4% to $160 per carat, reflecting a higher share of high-value stones in the purchasing mix. However, the rough price index dropped by 18% year-on-year to $109 per carat, indicating oversupply and high inventory levels in the trading market.
Paul Zimnisky's October 19th rough diamond price index report shows a year-on-year decline of 10.7%, which is slightly better compared to De Beers' figures.
4. Strengthening Retail Partnerships
De Beers has strengthened its partnerships with Signet and Chow Tai Fook to boost consumer confidence in natural diamonds in the U.S. and Chinese markets. The recently launched campaign, "Worth the Wait", is also part of this marketing strategy.
Additionally, De Beers is promoting the DiamondProof device, which is being deployed at jewelry retail counters to quickly differentiate between natural diamonds and lab-grown diamonds.