Editor’s Note
De Beers has revised its 2024 production forecast downward, citing strategic adjustments following discussions with partners. This reflects broader market dynamics affecting the natural diamond industry.
Natural diamond miner and retailer De Beers Group recently announced a downward revision of its 2024 natural diamond production forecast. Previously, the group expected an annual output of 26-29 million carats, which has now been adjusted to 23-26 million carats.
De Beers Group stated in its 2024 interim report.
De Beers Group released its performance report for the first half of 2024 (up to June 30, 2024) on July 25. During the reporting period, the group’s revenue fell by 21% year-on-year to $2.2 billion (approximately 15.97 billion yuan), compared to $2.8 billion (approximately 20.325 billion yuan) in the same period of 2023.
During the reporting period, De Beers Group’s sales of natural rough diamonds decreased by 22% year-on-year to 11.9 million carats, down from 15.3 million carats in the same period of 2023. The average price per carat was approximately $164, essentially flat compared to $163 in the first half of 2023. This reflects a higher proportion of sales from higher-value rough diamonds, offsetting a 20% decline in the average rough price index.
said De Beers Group CEO Al Cook in the performance report.
Weak demand in the United States and China, De Beers Group’s two major markets, is the primary reason for the group’s production cuts and continued revenue decline.
In the first quarter of 2024, De Beers Group’s rough diamond sales experienced a brief recovery. The group noted in its report that this was mainly due to the long-tail effect of concentrated consumption during the 2023 year-end holiday season in the US market. However, as retailers became cautious about restocking again in the second quarter, inventory levels for midstream diamond processors continued to rise, leading to a further widening of the decline in De Beers Group’s rough diamond sales over these three months.
Diamond consumption in the US market is being suppressed by economic uncertainty, declining consumer confidence, and competition from lab-grown diamonds. However, De Beers Group pointed out that the divergence between the natural diamond and lab-grown diamond markets is accelerating. The continued decline in wholesale prices of lab-grown diamonds has forced US retailers of lab-grown diamonds to repeatedly lower prices to remain competitive, which may lead some retailers to refocus on natural diamonds with higher profit margins.
In the Chinese market, the performance of the natural diamond retail market is also not optimistic. De Beers Group mentioned that as most Chinese jewelry retailers are busy clearing existing inventory, this has also reduced demand for new rough diamonds in the region.
In the first half of the year, De Beers Group’s high-end jewelry brand, De Beers Jewellers, achieved positive growth in its design-led high-end jewelry series and boutique jewelry series. However, diamond jewelry products related to weddings faced challenges from the macro environment, with particularly weak performance in the Chinese market.
Regarding the market situation for the second half of 2024, De Beers Group believes that a new natural diamond marketing strategy will boost consumer confidence in the Chinese and US markets. At the end of 2023, De Beers Group invested a total of $20 million (approximately 145.7 million yuan) in the US and Chinese markets to repackage and promote the classic advertising theme “A Diamond is Forever.” The entire communication plan includes offline events, advertising placements, and industry collaborations.
However, based on the market performance in the first half of 2024, De Beers Group’s new marketing campaign has not made a significant impact in the Chinese market. The downturn in the natural diamond business has also brought De Beers Group to a crossroads.
On May 14, 2024, mining company Anglo American announced plans to sell or spin off its diamond business unit De Beers, Anglo American Platinum, and coking coal assets. Through this large-scale restructuring, Anglo American will focus on its iron ore and copper businesses. According to *The Wall Street Journal*, Anglo American has held discussions with potential buyers, including luxury companies and sovereign wealth funds from Gulf countries, regarding the acquisition of the De Beers business.