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De Beers to increase diamond supply in 2018 amid global supply decrease

De Beers is set to increase its diamond supply in 2018. This is in spite of the global diamond supply being estimated to decrease by approximately 2.5% in the same year. According to research reports, of the world’s top three diamond miners by volume, only De Beers is expected to increase production this year. On the other hand, Alrosa and Rio Tinto are both estimated to decline.  Combined, the three companies represent approximately 70% of global diamond supply by volume.

De Beers is estimated to produce 35.2 m carats worth US $5.7 billion in 2018. This is more than enough to maintain its status as industry-leader in terms of value produced. The aforementioned figure in carats is but a representation of a modest 1.7 million carat increase year-over-year. Moreover, the boost is expected to come from the company’s Jwaneng mine in Botswana. This is currently the richest diamond mine in the world in terms of value produced.

In 2018 Jwaneng is estimated to produce 13.5m carats. The carats, which are worth US $2.7Bn, are an increase from 2017’s 11.9m carats worth US $2.3Bn. On its own, the mine represents 17% of global diamond supply by value on an annual basis. This is also with an estimated resource of over 350m carats. Currently, it retains a mine-life of up to 27 years.

At current estimates, De Beers would be producing at approximately 95% of production capacity in 2018, which compares to 91% last year and only 80% in 2016. Furthermore, the company’s strategy of “producing to demand” over the past two years has reduced the company’s excess inventory to more normal levels.

With as much as 12 m carats of excess inventory on hand as at 2015, the company now only holds between 3 and 4m carats over minimum operating levels. According to estimates, this the lowest figure since 2014.

 

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