De Beers' 2018 Production Up 7% to 35.3M Cts, Sales rise 2% to $5.4B

Mining and Exploration
24/01/2019 11:22

The De Beers Group has announced its production results for 2018 and Q4 2018, reporting that annual production increased by nearly 7% to 35.3 million carats, while a 4% decline in carats sold was offset by a higher average price per carat, leading revenues to rise 2% to $5.4 billion. They said the rise is production was due to a planned increase at the Orapa mine, although the group's output was in the lower half of the production guidance range of 35 to 36 million carats. The miner sold 33.7 million carats in 2018 (35.1m in 2017), but the average price per carat increased by 6% to $171 from $162, due to a lower proportion of lower value rough diamonds sold in 2018. De Beers has set its 2019 guidance at 31-33 million carats, explaining that the lower production is driven by the process of exiting from the Venetia open pit, with the underground becoming the principal source of ore from 2023. 

De Beers ended its production year strongly, reporting that Q4 rough diamond ouput increased 12% to 9.1 million carats. Q4 production in Botswana increased 15% to 6.3 million carats, as Orapa output increased 20% to 3.6 million carats, driven by planned favourable grade and higher plant utilisation. Jwaneng production increased nine percent following an increase in tonnes treated. Production elsewhere also increased across the board in Q4, rising three percent in Namibia to 505,000 carats, seven percent in South Africa to 1.2 million carats as a result of planned higher grade ore at Venetia, and 5 percent to 1.0 million carats in Canada due to higher grades at Victor as it reaches the end of its life. This was partially offset by planned lower grades at Gahcho Kué.

Q4 rough diamond sales volumes totaled 9.9 million carats (9.2 million carats on a consolidated basis) from three sales cycles, compared with 8.2 million carats (7.5 million carats on a consolidated basis) from the same number of sales cycles during the equivalent period in 2017. They explain that their fourth quarter rough sales revenues increased year on year as the re-phased allocations of some lower value rough diamonds from Sight 7 (in September) were realised in Sights 9 and 10. De Beers notes that 2018 sales volumes on the whole were lower than production, driven by lower demand for lower value rough diamonds in the second half of 2018.

De Beers' main competitor, Russia's Alrosa, also released its production figures today, citing output of 36.7 million carats, with 38.1 million carats in sales earning $4.5 billion. Alrosa's guidance for 2019 is 38 million carats.