Production of rough diamonds cuts in 2023, major mining companies reportedPublished: 22/08/2023
In the midst of summer 2023, prominent mining companies in the diamond industry have released crucial reports, indicating a notable reduction in rough diamond production due to a substantial decrease in demand. This downturn has subsequently resulted in a striking 44% plunge in diamond sales.
De Beers: Steady Production Amidst Market Shifts
De Beers, a major player in the industry, has maintained a consistent diamond production this year, yielding a cumulative output of 16.5 million diamonds. This figure presents only a slight 2% deviation from the production seen during the corresponding period last year, which stood at 16.9 million carats. In Q2 2023, the company recorded rough diamond sales amounting to 7.6 million carats, a decline from 9.4 million carats in Q2 2022 and 9.7 million carats in Q1.
Petra Diamonds: 44% drop in revenue
Petra Diamonds’ financial results for the fourth quarter and the entire fiscal year underscore the company’s strategic decision to postpone the majority of its Tender 6 rough diamond sales to fiscal year 2024. This shift was prompted by a temporary lull in demand for rough diamonds. Consequently, Petra Diamonds experienced a significant 44% drop in revenue, amounting to $328.4 million. The decline was attributed to reduced production, fewer exceptional diamond recoveries, and the choice to defer one sales event to FY2024.
Rio Tinto: Adjusting to Market Trends with 16% Decrease
Rio Tinto, in line with the industry trend, reported a 16% decrease in diamond production. While the company did not provide specific remarks regarding the diamond market, it acknowledged the impact of falling commodity prices in Q2, influenced by a slowdown in demand across various sectors.
Alrosa: Revenue Resilience and Broader Implications
Alrosa, on the other hand, showcased resilience in its revenue for the first half of the year, totaling 188.2 billion Russian roubles ($1.9 billion). This marked a modest 0.2% increase from the same period in 2022 and a noteworthy 3.5% rise from the equivalent timeframe in 2021. However, the company’s net profit experienced a significant 35% year-on-year decline, settling at 55.6 billion roubles.
The geo-political ramifications of Alrosa’s activities have extended beyond financial influence. The United States’ decision in April 2022 to sever Alrosa’s access to its banking system and restrict direct diamond sales to the U.S. market drew attention. In contrast, the European Union’s continued engagement with Alrosa, purchasing Russian diamonds worth 1.4 billion euros ($1.5 billion) in 2022, raised intriguing dynamics within the market.
Remarkably, Alrosa’s presence in the diamond sector goes beyond finance, as exemplified by its ownership of the B-871 Alrosa submarine within the Russian Black Sea Fleet. This submarine underwent comprehensive repairs and modernization in 2022, acquiring the capability to employ Kalibr/Club cruise missiles. This is exactly the kind of missile Russia uses to bomb Ukrainian cities and civilians.
Surprisingly, as of August 2023, Alrosa remains a participant in the Kimberley Process, with its diamonds continuing to bear the “conflict-free” designation.