De Beers Group reported preliminary financial results for 2024, revealing a significant drop in production and revenue due to persistent challenges in the rough diamond market. The company cited higher-than-normal midstream inventory levels and depressed consumer demand, particularly in China, as key factors impacting performance.
De Beers’ rough diamond production fell by 22% to 24.7 million carats, compared to 31.9 million carats in 2023. This reduction reflects the company’s proactive response to market conditions, aiming to manage working capital and reduce inventory. Revenue also declined sharply, down 23% to $3.3 billion, primarily driven by a 25% decrease in rough diamond sales.
“Rough diamond trading conditions in 2024 continued to be very challenging,” De Beers stated in its report. The company noted a brief period of recovery in demand during the first quarter of 2024, but this was short-lived as economic challenges in China persisted and US retailers remained cautious.
Despite the overall decline, the average realised price of diamonds increased slightly to $152/ct, up from $147/ct in 2023. This was attributed to a higher proportion of higher-value diamonds being sold, although the average rough price index decreased by 20%.
The challenging market conditions also impacted profitability, with underlying EBITDA falling to $(25) million, compared to $72 million in 2023. Unit costs increased to $93/ct due to lower production volumes.
Looking ahead, De Beers anticipates continued market challenges in 2025, with production guidance set at 20-23 million carats. The company expects modest rough price growth in the medium term, driven by production cuts and a stabilisation of demand in China.
De Beers also highlighted its “Origins” strategy, focused on streamlining the business and reducing overhead costs. The strategy includes focusing upstream investments, integrating the midstream, resetting the downstream, and pivoting synthetics, with Lightbox suspending production of lab-grown diamonds for jewelry.
The company emphasised its commitment to natural diamonds and announced new marketing collaborations with major retailers in the US, India, and China. De Beers also launched DiamondProof™, a new device for distinguishing between natural and lab-grown diamonds.
The report also detailed an impairment of $2.9 billion to Anglo American’s carrying value of De Beers, reflecting adverse macro-economic conditions and industry-specific challenges.
Finally, De Beers announced that it had concluded negotiations with the Government of Botswana for a new 10-year sales agreement and a 25-year extension of mining licenses.
While the near-term outlook remains challenging, De Beers expressed optimism about the long-term prospects for the natural diamond industry, citing the potential of diamond provenance and the expected decline in lab-grown diamond prices.