De Beers decreased its rough diamond production in Q2 by 14% to 7.7 million carats and revised its full-year guidance downwards to ~31 million carats in response to a backlog of polished diamond inventories in the midstream and weaker trading conditions. The overall decline was mainly driven by reductions in Botswana (Debswana) and South Africa (DBCM). The miner's H1 production fell by 11% to 15.5 million carats from 17.5 million carats during the same period a year ago. De Beers' sales volume also fell from 10 million carats in Q2 2018 to 9 million carats in Q2 2019 as rough demand diminished "as a result of challenges in the midstream with higher polished inventories, and caution due to macro-economic uncertainty, including the US – China trade tensions."
De Beers' reduced its production across all of its diamond-producing countries, the most impactful of which was the 9% reduction in Botswana to 5.7 million carats from 6.3 million carats in Q2 2018, reflecting a planned shutdown at the Orapa mining unit. Output also took a nosedive in South Africa, falling by 44% to 0.6 million carats due to lower mined volumes at Venetia as it approaches the transition from open pit to underground. Production at the Voorspoed mine also came to an end as it was placed onto care and maintenance in Q4 2018 in preparation for closure. Production in Canada fell 9% to 1.1 million carats due to planned lower grades at Gahcho Kué, while output at the Victor mine fell by 4% to 0.2 million carats as it reached the end of its life during Q2 2019. The volume of carats recovered in Namibia dropped by 35% to 0.3 million.
In addition to declines in production, the average prices De Beers achieved for their rough diamonds fell by 7% to US$151/carat (H1 2018: US$162/carat), driven by a 4% reduction in the average rough price index and a change in the sales mix in response to weaker conditions. De Beers responded to flagging demand by reducing their asking prices for rough diamond at Cycle 5 in June, where they earned only $390 million. This made sight number five of 2019 the lowest-earning sight of the year to date, the smallest since the October 2017 sight ($370 million, Cycle 8) and the lowest for a June sale since the miner started releasing monthly sales data in 2016.