- Decline driven by a 22% decrease in rough sales volumes
- Sales of rough fell to $2.0bn from $2.5bn in first half of 2023
- But average price of rough remained steady at $164 per carat.
- Change in UK Listing Rules, effective 29 July 2024, reported
GAZETTE REPORTER
De Beers has reported a notable decrease in total revenue, dropping to $2.2 billion for the six months ending 30 June 2024, down from $2.8 billion in the same period the previous year.
According to half-year financial results issued by parent company Anglo American, this decline is primarily driven by reduced sales of rough diamonds, which fell to $2.0 billion from $2.5 billion in the first half of 2023.
The report highlights a 22 percent decrease in total rough diamond sales volumes, which plummeted to 11.9 million carats from 15.3 million carats.
More premium rough
But despite this significant volume drop, the average realised price of rough diamonds remained steady at $164 per carat, a slight increase from $163 per carat in 2023.
This stability in price is attributed to a higher proportion of premium rough diamonds being sold, offsetting a 20 percent decrease in the average rough price index.
“Underlying EBITDA decreased to $300 million, down from $347 million, driven by reduced sales volumes and high unit costs due to intentional lower production and the ramp-up of Venetia underground,” the report states.
Inventory levels
The earnings did benefit from strategic progress, with a fair value gain of $127 million recognised in relation to a non-diamond royalty right.
De Beers, which is the world’s leading diamond company, has strategically managed its rough diamond inventory levels amid softer trading conditions by curbing production to match demand.
The company’s capital expenditure also saw a 13 percent decline to $264 million, down from $302 million in the same period last year.
This reduction reflects the phased spending on life-extension projects, particularly the Venetia underground project.
Venetia underground, Jwaneng Cut-9
Investment in the Venetia underground project remains a priority, along with other life-extension initiatives such as Jwaneng Cut-9. “The capital expenditure reflects phasing of life extension spend for the Venetia underground project,” the report notes.
Additionally, the report emphasises the ongoing collaboration between De Beers and the Government of the Republic of Botswana.
The two parties have signed Heads of Terms outlining a new 10-year sales agreement for Debswana’s rough diamond production through 2034 and new 25-year Debswana mining licences extending to 2054.
DeBeers and Botswana
The formalisation and implementation of these agreements are currently in progress, with the existing sales agreement remaining effective in the interim.
“De Beers and the Government of Botswana are working together to progress and implement the formal new sales agreement and related documents, including the mining licences,” says the report.
???? Given that Botswana holds a 15 percent stake in De Beers, the new arrangements initially constituted a related party transaction under the UK Listing Rules, requiring shareholder approval from Anglo American.
Threshold for related arty
However, recent amendments to the UK Listing Rules, effective 29 July 2024, have altered these requirements.
The threshold for a shareholder to be considered a related party has been raised from 10 percent to 20 percent, and the necessity for shareholder approval of related party transactions has been removed.
Consequently, the new arrangements between De Beers and the Government of Botswana will not require Anglo American shareholder approval.
“Anglo American does not propose to seek shareholder approval for the new arrangements,” the report states, given the updated listing regulations. XXXX