De Beers Adjusts Production Outlook Again

RAPAPORT... De Beers' full-year production will be at the lower end of its previous guidance because of "continuing operational challenges," parent company Anglo American said Thursday.The miner now expects to recover around 32 million carats of rough diamonds for 2021, tightening the plan from an earlier range of 32 million to 33 million carats. The new outlook is "subject to the extent of any further Covid-19-related disruptions," it added.The update comes amid a global deficit in rough supply resulting from mine closures, the depletion of mining companies' inventories, and strong consumer demand for polished. Both De Beers and Alrosa have struggled to meet the robust appetite for rough, with the shortages "expected to persist," the latter said in a report this week.Still, De Beers' third-quarter production was stronger than a year ago, rising 28% to 7.2 million carats for the three months ending September 30. This reflected an intentional increase in output in response to strong demand, the company explained.Production in 2020 was relatively low because of the weak market and social distancing at mines. The Jwaneng deposit in Botswana and the Venetia site in South Africa drove the rebound this year, Anglo American noted.Rough sales jumped 18% year on year to 7.8 million carats for the period, even though the company held only two sights, compared with three in the same quarter of 2020. "Demand for rough diamonds continued to be robust, with positive midstream sentiment reflecting strong demand for polished-diamond jewelry, particularly in the key markets of the US and China," the company continued.De Beers has now adjusted its 2021 production plan four times, having initially predicted output of 34 million to 36 million carats. The main factors behind these changes have been heavy rainfall in southern Africa earlier in the year, coronavirus-related shutdowns in Canada, and power disruptions in Botswana.Correction, October 21, 2021: The headline and first sentence of this story have been changed to clarify that De Beers tightened its production guidance rather than lowering it.Image: A De Beers haul truck transporting kimberlite at the Venetia mine in South Africa. (Ben Perry/Armoury Films/De Beers)