Debswana at anchor output jump at De Beers
Pauline Dikuelo | Friday February 24, 2017 17:10
De Beers has not increased output for several years as a combination of indigestion in the cutting and polishing industry plus sluggish global economic growth saw the diamond demand softening. Announcing De Beers’ financial results for the year ended 2016, head of Strategy and Corporate Affairs Gareth Mostyn said the group would this year raise production to between 31 million and 33 million carats from 27 million carats last year.
“With midstream stocks having returned to more typical levels in 2016, rough diamond demand is expected to normalise in 2017, reflecting underlying consumer and retail demand. While producers continue destocking, forecast diamond production for 2017 is expected to be in the range of 31 million to 33 million carats, subject to trading conditions. The increase will mostly come from Jwaneng at Debswana as well as our new mine in Canada, Gahcho Kué,” he said.
Debswana is equally joint owned by government and De Beers, the diamond unit of Anglo American.
Last year De Beers sold 31 million carats including the ones, which were in the inventory.
“Last year our production was way below a typical level as we produced about 27 million carats, which is a little below normal production. Following the challenging conditions we however managed to pull back,” he said.
In the year ended December 31, 2016, Debswana maintained production at close to the previous year’s levels with output of 20.5 million carats compared to 20.4 million carats recorded in the prior year.
Jwaneng’s production increased by 23% driven by higher tonnes treated, largely offset by Orapa where production was 20% lower. By year-end, 85% of the 500 million tonnes of waste stripping required to expose the ore was mined at Jwaneng Cut 8 becoming the main source of ore from 2018. Mostyn said they would continue monitoring the situation at Damtshaa Mine, which was put under care and maintenance in January 2016. He said producers destocked during 2016, as sentiment in the midstream improved and rough and polished inventories normalised supported by a series of initiatives put in place by De Beers starting in the second half of 2015. “These included lowering rough prices, providing flexibility to sightholders for their purchase arrangements and increased marketing activity to drive consumer demand,” he said.
De Beers’ total revenue increased by 30% to $6.1 billion compared to $4.7 billion recorded in the prior year. This was driven by higher rough diamonds sales, which increased by 37% to $5.6 billion. This was attributable to a 50% increase in consolidated sales volumes to 30 million carats compared to 19.9 million carats recorded in the previous year.
Apart from Debswana, De Beers owns mines in Namibia, South Africa and Canada.
Production at Namdeb Holdings decreased by 11% to 1.6 million carats, with reduced output at Debmarine Namibia and lower grades at Namdeb’s land operations.
In South Africa, production declined by nine percent to 4.2 million carats, mainly due to the early completion of the sale of Kimberley Mines in January 2016, partly offset by an increase of 12% at Venetia owing to the processing of higher grades. In Canada, production declined by 45% to 1.0 million carats owing to Snap Lake being placed onto care and maintenance in December 2015.