De Beers’ revenue down 24%

De Beers Group’s profits fell by 24% in year 2019 to $4.6 billion compared to the $6.1 billion profit that was amassed in 2018,with the decline ascribed mainly to drop in sales of rough diamond which went down to $4.0 in 2019 compared to $5.4 billion in 2018.

The Group revealed during the announcement of financial results on Thursday in Gaborone that the decrease in rough diamond sales was due to an 8% decline in consolidated rough diamond sales volumes to 29.2 million carats compared to 31.7 million carats that was mined in 2018.

The company – which mines about 60% of its diamonds in Botswana through Debswana, a 50-50 partnership with Government of Botswana – has been hurt by a number of challenges in the period under review.

De Beers Group Chief Financial Officer, Susanne Swanniker-Tettey, said the year 2019 has been a difficult period for the group across all regions of excavating.

The group now fears that the outbreak of COVID-19 virus (formerly Corona Virus) in China will also impact negatively on its performance in the first Quarter of 2020 as well.

The CFO buttressed that China is one of the key markets for De Beers due to its large economy. She noted that sales of diamonds in Hong Kong as an emerging market was also being affected.

She said due to the drop in consumer demand especially for rough diamond, the group has taken a decision to increase marketing expenditure to $178 million in 2019 to drive consumer demand.

Tettey also disclosed that production declined significantly in Botswana as it was four percent lower at 23.3 million carats in 2019 compared to 24.1 million carats in 2018.

“Production at Jwaneng mine increased by 5% to 12.5 million carats from 11.9 million carats in 2018 with 12 percent production decrease recorded in Orapa owing to a delay in an infrastructure project and expected lower grades,” Swanniker–Tettey said though remaining hopeful for growth in 2020.

Asked about when Cut 3 project will start in Orapa mine, she indicated that the project is a complex one and is currently going through pre-feasibility hence it will take bit of time.

The Orapa Cut 3, she insisted, will be able to extend the life of mine to many years.  Cut 2 at Orapa mine was expected to extend mine life until 2030 while Cut 9 at Jwaneng mine will extend the mine life to 2035, she said.