In a significant move, the world’s largest diamond mining company by value has announced further production cuts, adding to its already implemented plan to curtail output by 10 percent. This decision led to a 15 percent year-on-year decline in second-quarter production, dropping to 6.4 million carats, as reported in an update on Thursday.
The potential sale or listing of De Beers was a crucial component of Anglo’s broader strategy to fend off a £39 billion takeover bid from industry giant BHP earlier this year. However, the ongoing slump in the diamond market poses a challenge to achieving this goal by the end of 2025.
“Trading conditions became more challenging in the second quarter as Chinese consumer demand remained subdued,” stated Duncan Wanblad, Anglo’s chief executive.
High inventories for diamond traders and manufacturers, coupled with expectations of a slow recovery, have prompted the company to consider further production cuts. This strategy aims to manage working capital and preserve cash amid the tough market conditions.
The prospect of deeper production cuts comes as the company disclosed the impact of other setbacks in its second-quarter production update, which had been anticipated by analysts.
Anglo has downgraded its full-year guidance for metallurgical coal from 15-17 million tonnes to 14-15.5 million tonnes following a fire at its Grosvenor mine in Australia, which has been out of action for months. Costs for the coal business are also expected to rise significantly this year, estimated at $130 to $140 per tonne, up from $115 per tonne.
The company is prioritising the sale of its metallurgical coal division due to strong buyer interest, with plans to divest De Beers, its platinum unit, and nickel operations to follow.
Additionally, an impairment on the Woodsmith fertiliser mine in North Yorkshire, UK, is expected in the upcoming half-year results, as spending on the project is drastically cut back as part of the turnaround plan.
Despite these challenges, shares in Anglo rose by 2 percent in early trading in London on Thursday, buoyed by production results for most commodities exceeding consensus analyst forecasts. The company achieved record second-quarter iron ore production in Brazil and is on track to meet its guidance for the copper unit.
Wanblad reaffirmed his commitment to streamlining the company to focus on just copper, iron ore, and fertiliser within 18 months. “We are working at pace to execute on the asset divestments, including steelmaking coal,” he said. “Work is progressing with the aim of substantively completing this transformation by the end of 2025.”
Having reset its cost base, delivering new life-of-mine (LoM) plans with a smooth capital profile, the focus of Petra Diamonds is very much on refinancing its $250-million loan notes.
“We plan to get that done before the end of this calendar year,” Petra Diamonds CEO Richard Duffy outlined to Mining Weekly in a Zoom interview. (attached Creamer Media video.)
The refinancing of the loan notes will place the London-listed, Africa-active diamond mining company in a position to execute on the growth potential of its long-life assets.
These are Petra’s historic Cullinan diamond mine, located 100 km north-west of Johannesburg, its Finsch diamond mine, which is 160 km north-west of Kimberley, and the Williamson mine, 140 km south-west of Mwanza, in Tanzania.
It will also allow the company to begin to execute on its value-led growth strategy presented by not only its existing asset base, but also through other opportunities.
“We’ll be able to deliver and leverage what we believe will be a much more supported market from next calendar year,” Duffy commented.
The main focus of Petra’s recent investor day was to demonstrate the resilience of the business through steps implemented over the recent months.
The key features were cutting the cost base by $30-million on a sustainable annualised basis.
Through mine replanning, Petra has also smoothed its capital profile going forward basis to around $100-million a year or less.
The main reason is to ensure that the business is cash generative from this financial year (FY) 2025 and to refinance its loan notes, which mature in March 2026.
Mining Weekly: What, specifically, were the LoM updates?
Duffy: In the case of Cullinan mine, we have a board-approved mine plan that goes through to 2033, and the potential through further extensions in the mine itself to be mining beyond 2050. At Finsch mine, we highlighted that the board-approved mine plan sees mining through to 2032 but with the potential to continue mining below the current Block 5 through to 2040. Williamson has an approved mine plan to 2030 with extension opportunities and growth opportunities well into the 2040s. We also provided guidance for the next five years so that we could create some visibility in terms of our production, which we see growing from the current levels of around 2.8-million carats annually to around 3.5-million carats a year by 2028. Most of that growth comes from increasing grade, both at Cullinan and at Finsch.
When you speak of a lower-for-longer diamond market, how does that impact Petra?
What we’re seeing is a diamond market that we expect will continue to remain a little softer through to the end of this calendar year. We took measures towards the end of last year in recognition of what we expected to be a weaker-for-longer market. The steps we took back in October 2023 around deferring some of our capital spend and initiating that cost savings programme meant that we were able to reduce net debt by $11-million from the end of December 2023 to the end of June 2024, the end of our FY 2024. The measures taken ensured that we stopped any cash burn in the business, even in a tougher market. The steps we’ve taken around costs and smooth capital profile mean that we’ll continue to be resilient as a business, and be cash generative from this financial year 2025 onwards. So, we’re well placed to benefit from an improving market, which we expect to see from next calendar year.
What makes you more confident about the market in the medium- to long-term?
What we’ve seen in the market is the culmination of a number of factors that have created some headwinds for us, and that really has been on the back of the higher interest and inflation rates that have been a little more stubborn than expected, the slower return of demand from China, which is an important market for diamonds, and the disruption caused by the rapid growth of lab-grown diamonds. Those were the factors that led to the softer market, which we expect to continue through to the end of December. Why we’re more encouraged in the medium to longer term about what we expect to be a supportive diamond market is around some of the underlying supply-demand fundamentals. If you look at projected supply, or global production of diamonds, all the way through to 2033, the projections are that we’ll see an average 1% decline on an annual basis over that period. When you look at the demand side, there’s projected growth to 2033, of 2% to 4%, so from a fundamental supply-demand perspective, there’s a structural supply deficit. The US buys around 50% of all diamonds, and the projections are that US demand will continue to grow through to 2033. Interestingly, China isn’t projected to grow at the same rate as the US, but India is emerging as a very strong consumer, with 30% growth forecast through to 2033. We see India and its growing middle class as a new, increasingly important market for diamonds that is likely to overtake China.
How are natural diamonds faring against laboratory-grown diamonds?
If you look at lab-grown diamonds, the disruption they caused initially was largely the result of consumers not properly understanding this new lab-grown diamond category. Over the last few years, we’ve seen the price of lab-growns collapse to now sell at a discount of 80% to 90% of a natural diamond. As a result, lab-growns are now firmly established as a different product category in the diamond space. They’re a cheap early entry point and that differentiation will become more discernible and clearer over time. Also, importantly, retailers, jewellers are shifting back to natural simply because the price of lab-grown has collapsed. The margins have collapsed, and it doesn’t make economic sense for them to continue to push lab-growns. We see, in a sense, some reversal of the displacement of lab-grown that we saw previously, in favour of natural diamonds. Another important point is a number of lab-grown producers have stated that they’re moving out of producing gem lab-grown diamonds, and they’re shifting their lab-grown production to industrial applications, around semiconductors, etc. This is led by De Beers’ Lightbox business, where they’ve indicated they’re no longer going to be producing gem lab-grown diamonds, and the same is true of a number of other large lab-grown producers. For all of those reasons, we see inventory levels starting to come down across that value chain going into next year, a shift away from lab-grown back to natural, and the general economics starting to shift in favour of diamonds with the structural supply deficit providing the support.
How do you see traceability unfolding?
We see traceability technology as being part of the differentiation between lab-grown and natural diamonds. What this technology allows us to do, and we’re busy piloting this at the moment, in collaboration with De Beers’ Tracr™ and Sarine Diamond Journey™ technology, is to map all of our half-a-carat gem-quality diamonds, and half-a-carat in the rough and larger. The data around a diamond gets block-chained in a register, and we then trace that diamond through the cutting and polishing. Our clients link the polished diamonds back to the original rough, and that enables traceability all the way through to the retail jeweller – essentially from mine-to-finger. For a consumer who then walks into a jewellery store in New York to buy a one-carat engagement ring, there would be a certificate associated with that, stating that the diamond was recovered from, for example, Cullinan mine in 2020. It would set up the number of employees that the Cullinan mine employs, provide details on all of the social and community projects undertaken by the mine, and include the carbon footprint associated with that polished diamond. So, there’s a whole story around the diamond that reinforces that purchase experience for the consumer, creating an opportunity to grow margin as part of that story, around the mine-to-finger journey.
DIAMOND VERACITY
The traceability that Petra expects to implement during the course of this calendar year will enable it to clearly verify that the diamonds:
are from a Petra mine; are natural and not lab-grown; and are not subject to any sanctions. The application of Tracr™ means that the diamonds from these mines will be subjected to the Internet of Things, AI and blockchain technology to provide comprehensive supply transparency.
In addition, the application of Sarine Diamond Journey™ begins with three-dimensional scanning to establish a verifiable image of the physical diamond and a definitive link to its digital report.
This enables the creation of an unbroken chain of authentication at every stage of the diamond’s journey – from rough to rough, rough to polished, polished to report.
Securely stored in the cloud, this data provides the foundation of end-to-end traceability.
A wealthy US doctor splashed out $275,000 on 5 ct emerald cut diamond for his fiancace.
He plans to have the D colour, flawless gem set in an engagement ring, according to California based Varsha Diamonds, which made the sale through retail partner Phillips Jewelry, in Tennessee.
“We’ll be setting it in the mounting of their choice,” said business owner Robbi Philips. “They are thrilled, and so are we. I feel honored to have found them a remarkable diamond that they will be proud of and will cherish forever.”
Varsha says its Fireworks brand diamonds are cut for beauty rather than size and the symmetrical step cuts achieve maximum white light brilliance.
“Fireworks Diamonds are scientifically proven by AGS’s Angular Spectrum Evaluation Tool (ASET) and Sarine light performance technologies to be the largest and brightest diamonds in the world, and all because of the way they are cut,” said Jay Mehta, director of business operations at Varsha.
Corruption in Zimbabwe has cost the country at least $20bn in “disappeared” rough diamonds, according to veteran economist and former member of parliament Eddie Cross.
He accuses the late Robert Mugabe, who served as prime minister from 1980 to 1987, of personally helping himself to $1.3bn of diamonds.
“We still suffer from massive leakages of economic output and income,” Cross, 84 (pictured), writes on his website, in a blog entry that pulls no punches and which has been widely reported in Zimbabwe’s media.
“When I was in parliament in 2012, I raised the wholesale theft of diamonds from the newly discovered Marange diamond fields,” he says.
“These covered nearly 100,000 hectares and in that year I estimated that we produced more carats than Botswana.”
Production from the Marange alluvial deposit started in 2006, after De Beers discovered diamond reserves, and continues today.
“It was taken over illegally by the Ministry of Mines and then exploited by six companies, all linked to powerful elements in the government, including the state president,” he writes.
“My personal estimate is that Marange has produced nearly $30bn in raw diamonds since then. A third was probably absorbed in costs but the rest has disappeared.
“Mr Mugabe famously asked where US$15bn had gone since mining had started. He knew the answer to that as I think he personally took $1.3bn.”
He alleges widespread corruption in every sector of government activity.
“It is well known that in certain ministries if you want a decision of any sort, you have to pay for it. I was approached by a senior civil servant for a bribe to sign a letter, I said but surely that is your job.
“I was told ‘do you think we do this sort of thing for nothing?’ I did not pay the bribe and did not get the letter.
He goes on to say: “This scrouge soon also infects the private sector. The statement by the Dubai Gold Exchange that in 2023 they bought nearly 450 tonnes of gold from informal origins in Africa. That is $32bn worth, a third from Zimbabwe. No wonder we are awash in US dollars in cash.”
Nita Ambani was a vision of opulence, literally studded in diamonds! Yes, you read that right. The grooms mother is renowned for her extravagant taste in jewels, showcasing an array of rubies, emeralds, and sapphires. But her love for these gems doesn’t stop at just necklaces; she seamlessly integrates them into her hair and clothing as well. On Sunday, the Ambani family hosted a grand reception to continue the celebrations of Anant Ambani and Radhika Merchant’s wedding, which kicked off with a spectacular ceremony on Friday, July 12. The Mumbai event was a glittering affair, with family members like Mukesh, Nita, Akash, and Isha Ambani in attendance, alongside a host of Bollywood and international celebrities.
Nita Ambani never fails to make a fashion statement, and her latest appearance at the reception was nothing short of spectacular. With her saree adorned in exquisite jewels and draped with unparalleled elegance, she once again proved her status as a fashion icon.
The value of rough diamonds mined globally during 2023 fell by just over 20 per cent, down from $16bn in 2022 to $12.7bn according to the latest Kimberley Process (KP) figures.
The volume of diamonds mined fell by 7.6 per cent to 111.5m carats, and average per carat prices slipped almost 14 per cent from $132.27 to $114.10.
Production in Russia fell by 11 per cent, from 42m carats in 2022 to 37.3m carats, although average price carat actually increased by 14 per cent from $84.77 to $96.64. Exports were down 5 per cent to $3.68bn.
Botswana’s production volume increased slightly to 25.1m carats in 2023 but plunged 30 per cent by value, from $4.7bn in 2022 to $3.3bn.
The global diamond industry peaked in 2017, according to historical KP data, when production hit 150m carats, a 16 per cent leap from 126m carats the previous year.
It held firm at 149m carats in 2018, then slipped to 138m carats in 2019; 107m carats in 2020 (down 22 per cent) and 119m carats in 2021.
Letšeng is the world’s highest dollar per carat diamond mine.
Gem Diamonds has announced the recovery of a 123.2 carat type 11 white diamond at its Letšeng mine in Lesotho.
This is the eighth greater than 100 diamond found at the operation in 2024, the company said.
Type IIa diamonds are the most valued and collectable precious gemstones, as they contain either very little or no nitrogen atoms in their crystal structure. Boart diamonds are stones of low quality that are used in powder form as an abrasive.
The prolific Letšeng mine is one of the world’s ten largest diamond operations by revenue. At 3,100 metres (10,000 feet) above sea level, it is also one of the world’s most elevated diamond mines.
The Letšeng mine is famous for the production of large, exceptional white quality diamonds, making it the highest dollar per carat kimberlite mine in the world, Gem said.
Sanctioned Russian diamond miner Alrosa has concluded the purchase of a gold mine in the far east of the country and will invest $276m developing it.
The move comes seven months after the G7 and EU countries introduced the first phase of restrictions on the import of Russian diamonds.
Alrosa’s subsidiary, Almazy Anabara company, has bought 100 per cent of the Degdekan gold ore field in the Magadan region, according to a report by Russia’s Interfax news agency, from Polyus the country’s largest gold producer (also sanctioned).
Alrosa, the state-run miner, already has some gold mining operations, with an output of around 180kg annually.
But this marks a significant expansion, with the projected production of 3.3 tons from 2030.
In 2015 Russia’s State Reserves Commission said the deposit had reserves of 38.3 tonnes of gold.
“The development of the gold deposit will provide an additional synergistic effect for Alrosa’s business and will help increase its financial stability in the long term,” Alrosa CEO Pavel Marinychev said in a statement.
Alrosa sold $4bn of diamonds globally in 2022. The G7 nations, which are now blacklisting its diamonds, account for 70 per cent of diamond purchases worldwide.
In the first five months of the year, imports of Russian diamonds to Hong Kong increased 18-fold year on year, according to data from Hong Kong’s Statistics Bureau published on its official website on June 30.
Hong Kong has dramatically stepped its imports of diamonds from Russia, purchasing $657.3mn worth of Russian diamonds in the first five months of 2024.
In the period from January to May 2024, Hong Kong’s imports of Russian diamonds soared from $36.5mn a year earlier to $657.3mn. As a result, Russia has become the third-largest supplier of diamonds to Hong Kong, with its share of total diamond imports rising to 12% from just 1% in 2023.
India remains the leading supplier of diamonds to Hong Kong, with imports valued at $2.9bn, followed by Israel with $716.6mn. Notably, both India and Israel, unlike Russia, do not mine diamonds themselves.
The substantial increase in Hong Kong’s diamond imports from Russia highlights a significant shift in the global diamond market. Dubai has also become a major market for the trade in Russian diamonds.
As bne IntelliNews reported, the EU included sanctions on Russian diamond exports as part of the twelfth sanctions package, but due to intensive lobbying by Belgium, where Antwerp is the leading European diamond market and the number-one destination for rough diamonds from Russian miner Alrosa, the sanctions were watered down and will be phased in gradually.
Russian diamond sanctions watered down again
Afraid of losing the diamond business completely to the growing rival markets in Asia and the Middle East, the EU has watered down the restrictions on trading Russian diamonds again last week.
The EU has extended the “sunrise period” for sanctions on Russian diamonds by six months and included an important concession for goods that predate the new rules, according to a statement released by the EU on June 24.
The EU also said the update “fine-tunes” the import ban on Russian diamonds included in the twelfth package and is included as part of the fourteenth sanctions package. Earlier in June, De Beers called for a one-year extension to the sunrise period for the G7 sanctions on Russian diamonds, but it is up to the individual countries to rule on the implementation of the ban.
The mandatory traceability programme for imports of rough and polished natural diamonds will now take effect on March 1, 2025 instead of September 1, 2024. This extension is intended “to allow more time to set up the G7 traceability scheme,” the EU explained reports Rapport.
This decision comes in response to calls from diamond trading powerhouse De Beers and other industry leaders to extend the interim period during which importers can use alternative documentation to prove that diamonds are not of Russian origin. Once this period ends, importers into the EU must use a traceability-based certification scheme to verify imports of diamonds over 0.50 carats.
Additionally, the EU has introduced a “grandfathering” clause to exempt diamonds that were already located in the EU or a third country other than Russia – or were manufactured in a third country – before the new rules were implemented. The EU ban on direct imports of diamonds from Russia began on January 1, 2024, while the ban on goods processed outside Russia started on March 1, 2024.
The EU said that these pre-existing diamonds no longer provide revenue to Russia.
“We are extremely pleased that, after months of intense negotiations, we have succeeded in pushing the needle to allow regularisation of so-called ‘grandfathered stock,’” said the Antwerp World Diamond Centre (AWDC). “Sanctioning these goods and prohibiting their trade would impose an unfair and severe financial burden on diamond companies without significantly impacting Russia’s revenues.”
The extension and concession aim to balance the need for stringent sanctions with the “practical realities of the diamond industry,” providing additional time and clarity for businesses to adapt to the new regulations.
Moreover, temporary imports or exports of jewellery, for example for trade fairs or repairs, will not fall under the ban. In addition, the EU has delayed the prohibition on jewellery incorporating Russian diamonds processed in third countries until the European Council, the EU’s executive arm, “decides to activate” it, the EU statement said.
The US currently has the strictest limits on Russian trade, requiring self-certification for diamonds of 1 carat or lower, falling to 0.50 carats on September 1. Larger diamonds are not covered by the sanctions.
Botswana’s economy contracted by the most since the peak of the pandemic in early 2020, after diamond production plunged.
Gross domestic product shrank an annual 5.3% in the first quarter, compared with growth of 1.9% in the prior three months.
The downturn was primarily influenced by a decrease in real value added of the diamond traders and mining & quarrying industries of 46.8% and 24.8% respectively, Statistics Botswana said in a report Friday.
Botswana is the world’s largest producer of rough diamonds by value, with the revenues making up the bulk of the southern African country’s budget receipts. The decline is likely to make meeting its fiscal targets for this year difficult. The central bank already warned last week that the government would probably miss its economic growth forecast of 4.2% because of weaker mining output.
The global diamond industry almost came to a standstill in the second half of last year as De Beers and Russia’s Alrosa PJSC — the two biggest miners — all but stopped supplies in a desperate attempt to stem a slump in prices. That hit earnings at De Beers, which mines more than three-quarters of its diamonds in Botswana.
Earlier this year De Beers said it expects any recovery in the beleaguered diamond market to be slow and gradual as the industry continues to suffer from weak economic growth in key markets such as China and the US.
