De Beers Q2 Performance: Production Falls, Sales Up, Rough Prices -16%

Mining and Exploration
20/07/2016 09:14

Anglo American published an update on its production performance for the second quarter of 2016, reporting that De Beers' diamond production for the period decreased by 19 percent to 6.4 million carats from the 8 million carats mined in Q2 a year ago, and 7.2% compared to Q1 2016. The decline reflects the decision to reduce production in response to prevailing trading conditions in the second half of 2015 and was intended to rebalance supply and demand. Full year production guidance remains unchanged at 26-28 million carats, subject to trading conditions. Consolidated rough diamond sales in the second quarter of 2016 were 9.6 million carats (from three Sights), a 49% increase compared to the 4.9 million carats (from two Sights ) in the second quarter of 2015. "Apart from the additional Sight in 2016, this increase reflected higher midstream restocking from lower inventory levels in 2015. Consolidated sales volumes for the first half of 2016 were 17.2 million carats, compared with 13.3 million carats for the first half of 2015 (from five Sights, in each case)." The De Beers rough price index was on average 16 percent lower in the first half of 2016 compared with the first half of 2015. The average realized price at $177/ct was 14 percent lower than the first half of 2015.

Mark Cutifani, Anglo American Chief Executive, said "We continue to demonstrate discipline in our key markets, particularly diamonds and platinum, in line with our focus on higher margin and lower cost assets. The decisive actions taken by De Beers last year led to more normal trading conditions in the first half of 2016 with sales volumes increasing as a result, but we maintain a cautious outlook."