Releasing its financial and operational review for the first six months of the current calendar year (H1 2017), De Beers said that its rough diamond production increased by 21% to 16.1 million carats (H1 2016: 13.3 million carats), while its total revenue decreased by 4% to $3.1 billion (H1 2016: $3.3 billion).

The Company said that production figures were in line with the higher production forecast for 2017, reflecting stable trading conditions as well as the contribution from the ramp-up of Gahcho Kué in Canada, while the dip in revenue was driven by lower rough diamond revenue – as expected, given the benefit of strong midstream restocking in H1 2016.

Announcing that the average realised rough diamond price decreased by 12% to $156/carat (H1 2016: $177/carat), partially offset by a 7% increase in consolidated sales volumes to 18.4 million carats (H1 2016: 17.2 million carats), De Beers said that the figures reflected stronger demand for lower-value goods in Q1 2017 following a recovery from the initial impact of India’s demonetisation programme in late 2016. The lower-value mix was compensated in part by a higher average rough price index, which was 4% higher when compared with H1 2016.

During the period, underlying EBITDA increased by 3% to $786 million (H1 2016: $766 million), primarily attributable to savings resulting from the closure of Snap Lake and a continued efficiency drive across the group, De Beers said, as well as from a stronger contribution from Element Six.

The Company said that sentiment in the midstream remained positive following a reasonable Q4 2016 retail season, with evidence of Chinese retailers restocking and demonetisation in India having less impact than anticipated. This supported good demand for De Beers’ rough diamonds, though spot polished prices remained broadly flat in H1 2017.

Giving mine wise details, De Beers said:

Debswana increased production by 6% to 11.1 million carats (H1 2016: 10.5 million carats), with production at Orapa increasing by 22%, marginally offset by Jwaneng, where production decreased 6% owing to lower grades. First ore from Jwaneng Cut-8 was extracted and processed in June 2017. Cut-8 will become Jwaneng’s main source of ore from 2018.

At Namdeb Holdings, production increased by 17% to 0.9 million carats (H1 2016: 0.7 million carats), mainly due to production recovering following Debmarine Namibia’s Mafuta vessel having been on extended planned in-port maintenance in Q2 2016. Debmarine Namibia’s new exploration and sampling vessel, the SS Nujoma, was officially inaugurated in June 2017 and is now fully operational.

In South Africa, production increased by 43% to 2.5 million carats (H1 2016: 1.8 million carats) as a consequence of higher grades at Venetia. Construction of the Venetia Underground mine continues to progress, with the underground operation expected to become the mine’s principal source of ore from 2023. In June 2017, the annual section 74 export levy exemption for DBCM was renewed until March 2018.

In Canada, production increased to 1.6 million carats (H1 2016: 0.3 million carats) due to the ramping up of Gahcho Kué, which entered commercial production on 2 March 2017. Production at Victor increased by 21% to 0.4 million carats as a result of higher grades. At Snap Lake, flooding of the mine, which commenced in January 2017, is now complete, thereby minimising holding costs while preserving the long-term viability of the orebody.

At Element Six, revenue and earnings improved following a modest upturn in oil and gas industry demand relative to the first half of 2016. This was offset partially by weaker demand for abrasive materials for road and mining applications.

In the jewellery segment, De Beers said it had acquired LVMH Moët Hennessy Louis Vuitton’s 50% shareholding in De Beers Diamond Jewellers (DBDJ) in March and is integrating the brand’s network in 16 consumer markets worldwide.

Forevermark continued to expand its retailer network during the first half of 2017 and is now available in more than 2,080 outlets in 25 markets, an increase of 11% compared with the first half of 2016.

During 2017, De Beers expects to invest a total of around $140 million in marketing (approximately 20% more than in 2016) through a combination of proprietary and partnership activity across the US, China and India. De Beers has substantially increased its investment in the Diamond Producers Association (DPA) in 2017.

The Company said that conditions support the growth of the polished diamond market, but the extent would be dependent upon a number of macro-economic factors, including the effect of US and China government policies on exchange-rate movements. It added that correspondingly, midstream demand for rough diamonds is expected to depend on the strength of different markets’ restocking requirements.

De Beers said its forecast diamond production (on a 100% basis) for 2017 remains unchanged and is expected to be in the range of 31-33 million carats, subject to trading conditions.