The Anglo American unit will now mine about 31 million carats in 2019, at the bottom end of a previous forecast range.
The company, once the monopoly supplier of diamonds, has a longstanding strategy to match supply with demand. The diamond industry’s engine room, dominated by family-run businesses that cut, polish and trade the stones, is struggling to make money amid a flood of polished diamonds and stagnant consumer purchasing.The weakness is showing up in the company’s sales, which are down about $500m so far this year compared with 2018.
De Beers had already planned to produce a lot less diamonds than last year, when it dug up more than 35 million carats, the most since the global financial crisis. First-half output of the stones was 15.6 million carats, 11% lower than in 2018.“Demand for rough diamonds remains subdued as a result of challenges in the midstream, with higher polished inventories, and caution due to macro-economic uncertainty, including the US- China trade tensions,” Anglo said Thursday.
Macquarie Group said before today’s announcement that it expects De Beers to post first-half profit of $567 million. While that’s down on last year, it’s performing far better than its smaller rivals, many of whom have seen their market values plummet to multi-year lows.