Anglo American said in an investor update that it is strategically trimming down annual overheads of De Beers by a substantial $100 million as part of its commitment to sustainable value. De Beers faced challenges in the market due to a decline in global GDP growth, leading to reduced demand and diamond prices.
The company said, “De Beers operationally has also been solid this year – but has faced significant pressure downstream in this second half. Consumer spending on luxury goods has eased in the current macro environment, while China has been much slower to recover post covid than Anglo American 2023 expected. With the most recent Sight of ~$80m, De Beers has been loss-making in the second half of this year with expected sales volumes of around 25 million carats. We believe the fundamentals for diamonds are strong and we are positioning ourselves to supply into that demand bounce.”
Acknowledging the cyclical nature of the market, De Beers remains optimistic about a forthcoming upturn. Collaborating closely with partners, the company aims to be well-positioned to meet increased demand when the market rebounds, evident in early signs of a turning tide.
In the pursuit of operational efficiency, De Beers is diligently streamlining its operations to achieve the targeted reduction in annual overheads. Simultaneously, capital expenditures for the upcoming year will be curtailed, with investments directed towards high-value opportunities in southern Africa, leveraging existing assets and exploring new frontiers.
De Beers’ strategic focus includes the advancement of the Venetia underground project in South Africa and the initiation of the first phase of the Jwaneng underground project in Botswana. These initiatives align with the company’s commitment to long-term fundamentals and access to premier diamond assets globally.
Renewing efforts in the downstream sector, De Beers has witnessed success with the revival of the iconic ‘A diamond is forever’ campaign. The company remains dedicated to fortifying demand for natural diamonds, unveiling the “Origin” story to emphasise the traceability and extraordinary contributions made by diamonds to producer countries.
De Beers anticipates continued progress in Botswana, working towards a comprehensive agreement with the government early next year, supported by renewed mining licenses. Through these strategic measures, De Beers aims to navigate market challenges and reinforce its position as a leader in the diamond industry.