Diamond crisis worsens for global giant De Beers

Diamond sales slumped in 2019. Photo / Getty Images

Anglo American curbed its plan to expand diamond production over the next two years after sales slumped in 2019 amid a wider industry crisis.

Anglo's De Beers unit will mine 1 million carats less than previously forecast in both 2020 and 2021, according to an investor presentation on Tuesday. That equates to less than 1% of global output but slows the pace of the company's expansion as an oversupply of rough diamonds weighs on the industry.

De Beers' buyers have grown increasingly frustrated with the cost of rough stones as the price of polished gems slump. That's led to wafer-thin margins and losses for some of the traders buying stones from De Beers and Russian rival Alrosa PJSC.

The crisis has spread to engulf the world's diamond miners as well. De Beers, which dictates prices to its select group of clients, reported sales through November were more than $1.2 billion lower than the same period in 2018.

The company, which says it mines to meet demand, has responded by offering more flexibility to its customers, allowing them to reject some purchases. Last month, De Beers cut prices across the board by about 5 per cent.

Even so, the company's production is still set to rise to as much as 34 million carats next year, from 31 million carats in 2019.

- Bloomberg