De Beers 2017 Production Increases 22% to 33.4M Ct., Sales Vol. Up 10%, Prices Fall

Mining and Exploration
25/01/2018 09:26

De Beers Group and parent company Anglo American announced rough diamond production for Q4 2017 increased five percent to 8.1 million carats from 7.7 million carats, bringing their annual production to 33.4 million carats, a 22% increase over 2016 (27.3m ct). They say the fourth-quarter rise reflects stronger trading conditions as well as the contribution from the ramp-up of Gahcho Kué in Canada, where production doubled to 993,000 carats due to the ramp-up of the mine, which reached nameplate capacity in Q2 2017. Q3 production, however, was notably higher at 9.2 million carats.

Production at Namdeb Holdings, Namibia also increased by 14% to 488,000 carats, mainly due to higher grades at Namdeb’s land operations, while production at De Beers Consolidated Mines in South Africa decreased by 17% to 1.1 million carats largely as a result of planned sequencing of ore sources at Venetia, where the increase in tons treated was more than offset by a reduction in grade.  At De Beers largest source of production, Debswana in Botswana, production increased marginally to 5.5 million carats. Production at the Orapa mine (pictured above) increased 14 percent, mainly due to planned increases in plant performance, and the ramp-up of Plant 1, which was previously on partial care and maintenance in response to trading conditions in late 2015. This was partially offset by Jwaneng where production decreased 15 percent due to expected lower grades. 

Sales Volumes

While consoliated sales volumes in Q4 2017 were flat at 7.5 million carats, total sales volumes, which are comparable to production, were 8.2 million carats in Q4 2017 (Q4 2016: 8.0 million carats). For the full year, consolidated sales volumes increased 10% to 33.1 million carats (2016: 30.0 million carats), as did total sales volumes, which reached 35.1 million carats (2016: 32.0 million carats). Consolidated sales volumes exclude De Beers’ JV partners’ 50% proportionate share of sales to entities outside De Beers from the Diamond Trading Company Botswana and the Namibia Diamond Trading Company, which are included in total sales volume. Both measures include pre-commercial production sales volumes from Gahcho Kué. Full year consolidated sales volumes excluding pre-commercial production sales volumes from Gahcho Kué were 32.5 million carats (2016: 30.0 million carats).

Prices continue to fall

De Beers full year consolidated average realised price was $162 per carat, a full 13 percent lower than in 2016, when the aveage price was $187 per carat. In turn, 2016 prices were another 10% lower than in 2015 ($207/ct). With 2014 and 2013 average prices both coming in at $198 per carat, the four-year average (2013-2016) was $197.5, which highlights the steep decline we have seen this year: -18% compared to the most recent four-year average. De Beers commented that the lower average price in 2017 reflected strong demand in Sight 1 2017 for lower value goods held in stock at 31 December 2016, following a recovery from the initial impact of India’s demonetisation program in late 2016, as well as the ramp-up of production from lower value per carat but high margin operations, including Orapa and Gahcho Kué. This scenario has been a prevailing one for minining companies in 2017. However, they note that the lower value mix was partially offset by a higher average rough price index, up three per cent compared with 2016.