Canada subsidiary boosts Q1 2017 production
De Beers and Botswana government’s 50/50 joint venture Debswana Mining Company has recorded a decline in production during the first quarter of 2017 (Q1 2017).
Debswana operates important diamond mines which contribute significantly to Botswana government’s mining revenues through payment of mining royalties and tax.
According to Q1 2017 production update released by De Beers’ parent company Anglo American last week, Debswana production declined from around 5.4 million carats during the last quarter of 2016 to 5.2 million carats during Q1 2017 and lower production at Debswana mines came after a decline in mining at Orapa, Letlhakane and Jwaneng mines. Debswana’s production decreased following Jwaneng mine’s 8% decline in production. Production at Jwaneng mine declined from 2,939 million carats in Q4 2016 to 2,955 million carats in Q1 2017 while Orapa mine declined by 11% from 2,366 million carats to 2,106 million carats and Letlhakane decreased by 4% from 135 000 carats to 130 000 carats. The update shows that in South Africa De Beers diamond production declined by 20% from 1,387 million carats in Q4 2016 to 1,106 million carats in Q1 2017 following decline in mining at Venetia and Voorspoed mines.
The update shows that De Beers’ lower production in Botswana and South Africa was offset by increased output in Namibia and Canada. Namdeb recorded 10% increase in production from 428 000 carats in Q4 2016 to 472 000 carats in Q1 2017 while De Beers Canada recorded 27% increase in production from 497 000 carats to 631 000 carats. It has emerged that increased production at the mines could not pick up De Beers production as total output declined by 5% from 7,752 million carats in Q4 2016 to 7,400 million carats in Q1 2017.
Anglo American management has however indicated that diamond production increased by 8% to 7.4 million carats compared with Q1 2016 and added that this reflected the contribution of Gahcho Kué in Canada as well as increases in response to improved trading conditions. During Q1 2017 De Beers recorded 75% increase in diamond sales after selling 14.1 million carats of diamonds compared to 8.0 million carats sold in Q4 2016. “De Beers’ total sales volumes of 14.1 million carats reflected improved demand for lower value goods in stock at 31 December 2016,” said Anglo American CEO Mark Cutifani. He indicated that production target for 2017 remains unchanged at 31-33 million carats and stated that the target is subject to trading conditions during the year. De Beers earlier on indicated that production is faced with challenges such increasing costs of production as diamond mines are developing deeper and becoming expensive to operate. The company cited existing mines such as the Jwaneng and Venetia underground mine among mines with increasing costs of operation.