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Photo courtesy of the De Beers Group.

ANGLO AMERICAN REPORTS A STRONG YEAR FOR DE BEERS,
WITH REVENUES CLIMBING FROM $3.4 BILLION TO $5.6 BILLION

 

Anglo American, majority shareholder in the De Beers Group of companies, has released the results of its subsidiary in 2021, noting that total revenue increased significantly to $5.6 billion, up from $3.4 billion in COVID-stricken 2020, with rough diamond sales rising to $4.9 billion, up from the $2.8 billion a year earlier.

The group’s better performance, Anglo American said, was driven by positive sentiment and strong demand for diamond jewelry in key consumer markets.

With midstream capacity recovering, despite the second wave of COVID-19 infections in India in the second quarter of 2021, on a consolidated basis rough diamond sales volumes were significantly higher at 33.4 million carats, from 21.4 million carats in 2020.

The average realized price rose by 10 percent to $146 per carat, up $133 per carat in 2020, primarily as a result of positive market sentiment which gave rise to an 11% percent strengthening of the average rough price index.

Anglo American reported that revenue also increased within De Beers’ other businesses including its primary synthetic-producing unit Element Six.

Underlying EBITDA increased to $1.1 billion, up from $417 million in 2020. This, Anglo American said, reflected the improvement in sales driven by the recovery in demand.

Photo courtesy of the De Beers Group.

ROUGH PRODUCTION UP 29 PERCENT

Rough diamond production increased by 29 percent to 32.3 million carats, up from 25.1 million carats in 2020, Anglo American reported, primarily due to the lower levels of production that occurred a year earlier as a result of the impact of COVID-19 related lockdowns and lower demand due to the pandemic.

Despite the operational issues and heavy rains in southern Africa in the first quarter of 2021, production was increased to meet the stronger demand for rough diamonds.

In Botswana, production was 35 percent higher at 22.3 million carats, up from 16.6 million carats, as production was increased in response to stronger prevailing demand.

Production at the giant Jwaneng mine in Botswana increased by 71 percent to 12.9 million carats, from 7.5 million carats a year before. This was due to the planned treatment of higher-grade ore, and as a result of COVID-19 related lockdowns in the previous year.

Production at the giant Jwaneng mine in Botswana increased by 71 percent to 12.9 million carats, from 7.5 million carats a year before. This was due to the planned treatment of higher-grade ore, and as a result of COVID-19 related lockdowns in the previous year.

Production at Botswana’s Orapa mine increased marginally by 5 percent to 9.4 million carats, from 9.0 million carats in 2020, despite the impact of heavy rainfall at the beginning of the year and the planned closure of Plant 1 later on.

In Namibia, production was broadly in line at 1.5 million carats, marginally up from the 1.4 million carats reported a year earlier, reflecting an increase from the remobilization of most marine mining vessels in late 2020, partly offset by planned maintenance.

In South Africa, production increased by 41 percent to 5.3 million carats, up from 3.8 million carats, owing to the impact of the COVID-19 lockdowns in the first half of 2020 and the planned processing of higher grade ore from the final cut of the Venetia open pit.

In Canada, production was marginally lower at 3.2 million carats, mainly due to a temporary COVID-19 related shutdown in the first quarter of 2021.

STRONG GROWTH IN CONSUMER DEMAND

Looking at the distribution chain, Anglo American said that the diamond industry continued to recover from the impacts of COVID-19 during 2021. In the first half of the year, consumer sales of diamond jewelry in the United States and mainland China posted positive growth, not only on the pandemic affected sales in 2020, but also in comparison to 2019 before the onset of the pandemic.

Other global consumer markets initially saw a less pronounced rebound due to the uneven timing of pandemic impacts across the world, but the second half of 2021 saw a more positive recovery trend across the entire international diamond value chain.

The ongoing increase in consumer demand led to strong growth rates in consumer sales of diamond jewelry in the United States, with holiday season sales increasing by about a third compared to 2020.

The strength of demand was the result of an accumulation of savings by U.S. consumers through the various lockdowns and restrictions on movement seen earlier in the pandemic; a pent-up demand for weddings and engagements; a strong desire for diamonds as meaningful gifts that symbolize personal connection; less luxury travel; and supported by ongoing marketing campaigns — including an increase in marketing effectiveness from De Beers.

Photo courtesy of the De Beers Group.

The positive demand trends in retail underpinned the increased demand for polished diamonds and as a result, stocks of polished diamonds in cutting centers steadily declined during the course of the year. Lower supply and steady demand for polished diamonds from retailers supported growth in polished diamond prices.

As downstream and midstream demand conditions continued to improve, rough diamond production and prices increased throughout the year, following the significant reductions seen at the start of the pandemic. Midstream sentiment and rough diamond demand were robust.

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