De Beers has announced that their first quarter 2020 rough diamond production was in line with Q1 2019 and Q4 2020 output, ending at 7.8 million carats. The miner noted a limited impact from the COVID-19 measures introduced at the end of the quarter in producer countries. Nonetheless, De Beers has revised its production guidance downward by over 20% to 25-27 million carats (previously 32-34 million carats), citing the impact of COVID-19 on mining operations, wholesale trading activity and consumer traffic in key consumer markets. The guidance adjustment will be subject to continuous review based on the disruptions related to COVID-19 as well as the timing and scale of the recovery in trading conditions.
In terms of percentage, production in Canada declined most significantly, the 0.8 million carats recovered representing a 19% decline compared to Q1 2019 and a 16% decline from Q4 2019. De Beers explained this was primarily due to the closure of the Victor mine, which reached the end of its life in Q2 2019. Gahcho Kué production increased by 4% to 0.8 million carats due to strong plant performance. Botswana production decreased by 5% to 5.6 million carats, driven by a 7% decrease at Orapa due to challenges related to commissioning of new plant infrastructure and maintenance, while production at Jwaneng reduced by 4% due to planned lower grade.
In South Africa, however, production increased by 97% to 0.8 million carats as the final ore from the open pit is mined prior to transition to underground. Production in Namibia increased by 6% to 0.5 million carats due to planned higher grade at the marine operations.
Rough diamond sales volumes in Q1 2020 totalled 8.9 million carats from two sales cycles, earning $906 million. While this represents an increase in volume compared to Q1 2019, when they sold 7.5 million carats accross two sales cycles - a decline driven primarily by the fact that the early part of 2019 saw lower demand due to higher polished stocks - earnings in Q1 2019 were still 10% higher at $996 million due to the higher average price per carat achieved: $133 per carat compared to $102 per carat in Q1 this year.
De Beers explains that sales volumes in Q1 increased year-on-year despite adverse demand impacts in Q1 2020 from COVID-19, with customers given the option to defer some allocations in the second sales cycle, offset by a shift in demand towards lower value goods - which explains the lower average price achieved. The third sales cycle of 2020 was not held due to COVID-19-related restrictions on the movement of people and product, and customers were provided with flexibility to defer all their allocations from Sight 3 until later in the year.