De Beers, ALROSA Combine to Increase Rough Production 15% so far in 2017

Mining and Exploration
24/10/2017 10:46

With De Beers leading the charge by increasing rough production 46% in Q3 and 29% for the first nine months of the year, as ALROSA increased production 6% thus far in 2017, the two diamond mining giants together have churned out 54.8 million carats in the first nine months of 2017, a 15% increase over the 47.5 million carats during the same time frame last year. To this point in 2017, the Russian miner has produced a total of 29.5 million carats driven by higher production at alluvial deposits, Udachny underground mine and Karpinskogo-1 pipe operated by Severalmaz; ALROSA, "reaffirms its 2017 production plan for a total of 39.3 million carats”, said Igor Sobolev, First Vice President of ALROSA. Meanwhile, the De Beers Group has produced 25.3 million carats so far this year, increasing their output each quarter in line with the higher production forecast for 2017; De Beers has revised its production forecast to ~33 million carats (previously 31 - 33M cts). Their Q3 surge reflects, "stable trading conditions as well as the contribution from the ramp-up of Gahcho Kué in Canada." 

ALROSA rough diamond sales exceed $3.3B in first 9 months

Indicatively, in Q3 2017 ALROSA Group sold 7.5 million carats of diamonds, including 4.9 million carats of gem-quality diamonds at an average price of $169 per carat and 2.6 million carats of industrial diamonds at an average price of $9 per carat. Rough diamond sales amounted to as much as $848 million in Q3 2017 and as much as $3.3 billion for the first nine months of 2017. Polished diamond sales for these periods amounted to as much as $13.2 million and $68.1 million, respectively.

According to ALROSA's Q3 and 9M 2017 Operational Overview, at the company's Aikhal Division, good for 33% of total production in 2016 and including the Jubilee pipe (25% share), Aikhal underground mine (7%) and Komsomolskaya pipe (1%), 9M 2017 production has fallen by 3% y-o-y due to planned lower ore processing volumes and maintenance works at the Processing plant No. 14. At the Mirny Division, 2017 diamond production was 5.85 million carats, a 3% y-o-y increase due to processing of relatively higher grade ore from the Mir underground mine, despite diamond production at the Mir underground mine being suspended on August 4 as a result of the accident. Diamond production increased by 29% y-o-y at the Udachny Division (9% of production in 2016) due to higher processing volumes of ore and gravels from all production sites.

De Beers sees surge in production in all countries; sales volumes rise in Q3 "driven by a normalisation of demand for lower value goods in 2017"

Buoyed by De Beers Canada operations, where production increased five-fold to 1.1 million carats due to the ramp-up of Gahcho Kué, which reached nameplate capacity in Q2 2017, rough diamond production for Q3 2017 increased 46 per cent to 9.2 million carats. Significant production increases were evident across the board. At Debswana (Botswana), production increased 33 percent to 6.1 million carats. Orapa’s production increased 60 percent mainly driven by the ramp-up of Plant 1, which was previously on partial care and maintenance in response to trading conditions in late 2015. Jwaneng’s production increased 23 percent as a result of planned increases in feed to plant. At Namdeb Holdings (Namibia), production increased 12 percent to 454,000 carats, primarily as a result of higher mining rates from Debmarine Namibia’s Mafuta vessel. At De Beers Consolidated Mines (South Africa), production increased 41 percent to 1.5 million carats largely as a result of higher grades at Venetia.

Consolidated rough diamond sales volumes in Q3 2017 were 6.5 million carats (6.9 million carats on a total 100 percent basis) from two Sights, compared with 5.3 million carats (5.7 million carats on a total 100 per cent basis) from two Sights in Q3 2016. The increase was driven by a normalisation of demand for lower value goods in 2017. Full year production guidance has been revised to ~33 million carats (previously 31 – 33 million carats).