De Beers says it has identified eight new high-potential kimberlite sites in Angola, according to the Portuguese news agency Lusa.
It resumed explorations in the country in 2022, after a 10-year gap, and signed a memorandum of understanding (MoU) in February with Angola’s National Mineral Resource Agency, and its state-owned mining and trading companies, Endiama and Sodiam.
Aerial surveys by De Beers have so far identified eight sites in Lunda Sul, the northeastern province that is home to the huge Catoca mine. De Beers is now exploring six more areas, together with Endiama.
Angola has yet to explore 60 per cent of its diamond-rich territories. It opened its new Luele diamond mine last November, in a move that is forecast to increase annual production from 9.7m carats in 2023 to 14.6m carats this year.
Under the terms of the MoU there will be a review of kimberlite deposits to be explored and the transparency and traceability of diamond production will be promoted.
As part of efforts to provide increased provenance across the diamond industry, De Beers plans to bring the first non-De Beers Group goods onto its Tracr platform this year.
The Tracr platform uses blockchain, AI, the Internet of Things and advanced security and privacy technology to track a diamond’s journey from where it is mined and throughout the value chain, providing consumers tamper-proof assurance of where the diamond comes from.
“Our leadership in diamond transparency and traceability continued throughout 2023, underpinned by leading technologies, so that we can increasingly connect consumers with the provenance of their natural diamond and all the benefits it has delivered along its journey,” De Beers CEO Al Cook says in an update to shareholders on the group’s ‘Building Forever’ sustainability goals.
In its ‘Building Forever 2023 Sustainability Report’, published on May 8, De Beers reflects on the sustainability goals it has achieved.
This includes having engaged 5 000 women and girls in science, technology, engineering and mathematics – two years ahead of schedule.
Further, De Beers has agreed to establish a flagship Diamonds for Development Fund, in Botswana; progress key renewable energy projects in support of its emission reduction targets; and scale the development of Tracr.
De Beers reports that it is now registering more than two-thirds of its global production by value on the platform, with 1.5-million individual diamonds registered on the platform during 2023, bringing the total registered on Tracr to two million.
De Beers also opened up the platform to the wider industry, with a number of prominent marketplaces and laboratories, including the Gemological Institute of America and Gemological Science International having joined the platform.
Further, De Beers announced a collaboration with diamond traceability technology company Sarine to focus on recording technologically assured, rough-to-polished diamond traceability, without the need for further physical verification, the diamond miner notes in its sustainability report.
“Tracr and Sarine technology is open to users across the industry and will focus on making digital access to information on diamonds available to Group of 7 officials,” the report states.
In addition, De Beers also launched a “substantially uplifted” Pipeline Integrity (PI) standard, that includes higher expectations and a new melee supplement. The PI standard sets the key criteria for demonstrating segregation and traceability of eligible diamonds from non-eligible diamonds.
“It assesses each entity in the chain of custody, from the point of rough purchase through to the polished sorting office, to help ensure the management systems, policies and procedures are in place to segregate and reconcile eligible diamonds from non-eligible diamonds,” De Beers explains.
In 2023, the group expanded the scope of participants in the PI programme to Tracr participants involved in the handling or the manufacturing process who register polished eligible diamonds on the platform.
This expansion in scope resulted in a 16% increase in the number of entities required to participate in PI, compared with 2022.
Each entity participating in the PI programme must conduct an annual self-assessment and undergo a third-party assessment by SGS – De Beers’ chosen external verifier.
Meanwhile, De Beers is also progressing renewable-energy projects at its operations as part of its emissions reduction efforts.
“We continue our efforts to reduce our carbon footprint in line with our recently validated science-based emission reduction targets and are progressing investments in renewable energy to power our operations,” Cook says.
De Beers has entered into an agreement with Envusa Energy – a joint venture between its parent company Anglo American and EDF Renewables – to wheel 48 MW of wind and solar generated electricity to the Venetia mine, in Limpopo, South Africa, from 2025.
The diamond miner has also completed a prefeasibility study into a 50 MW on-site solar plant to be built at Venetia. A feasibility study into the project is under way and expected to be completed by mid-2025.
Further, De Beers has progressed plans for the development of a 34 MW wind farm at subsidiary Namdeb’s land-based operations, in Namibia. A feasibility study is under way.
In Botswana, Debswana is exploring renewable energy supply options to be developed in partnership with the Botswana Power Corporation or independent power producers.
It also held an inaugural Scope 3 supplier summit, mandating carbon reporting for the company’s sightholders and securing commitments with key suppliers to work on aligned greenhouse gas (GHG) reduction roadmaps.
De Beers has set a target of achieving a 42% decrease in its absolute Scope 1 and Scope 2 GHG emissions, as well as a 25% decrease in its absolute Scope 3 GHG emissions by 2030, with 2021 set as the baseline year.
BHP’s share-swap take over bid for arch-rival Anglo American to create a $185 billion mining giant will struggle to succeed, but if it does there is one arm of the target certain to be sold, the De Beers diamond business.
Despite its century-old reputation and claim to be the custodian of the diamond industry De Beers has become more trouble than it’s worth, under attack from two directions. Demand for diamonds is being battered by global economic uncertainty while the problem of slowing sales is being supercharged by the increasing popularity of lab-grown gems which are indistinguishable from mined diamonds.
A third factor which could seal the fate of De Beers is that BHP quit the diamond industry a decade ago after struggling to mix mining, and its basic function of heavy-duty earthmoving, with the fine art of producing and marketing baubles for the rich and newlyweds.
It could get worse for the diamond mining business because prices for lab-grown gems are continuing to fall as a market split widens. High-value jewels remain of interest to a handful of wealthy people, while the lion’s share of the market shifts to lab-grown.
De Beers, which was a pioneer in the business of lab-grown gems via its Lightbox subsidiary, has consistently played down the threat to its traditional mined-diamond business but sustaining that argument became a little harder on Tuesday when it reported a big production fall in the March quarter.
The 23% drop in output caused Anglo American to lower its full year diamond production target from between 29 million and 32 million carats to between 26-and-29 million carats.
Management blamed the decline on the effect of a build-up of inventory of unsold stones with lab-grown gems cannibalising demand for mined stones.
Forbes Daily: Join over 1 million Forbes Daily subscribers and get our best stories, exclusive reporting and essential analysis of the day’s news in your inbox every weekday.It Could Get A Lot Worse It could get a lot worse if a recent study of the diamond market by a specialist London jewelry firm is a guide.
The video player is currently playing an ad. You can skip the ad in 5 sec with a mouse or keyboard According to Hatton Jewels, which specialises in handling antique second-hand gems and does not sell lab-grown gems, some lab-grown diamonds are spectacular overpriced with retailers inflating their prices by as much as 1200%.
Rachel Smith, head valuer at Hatton said that in the current landscape, every business pays a similar wholesale price for lab-grown diamonds, regardless of disparities in their retail market value.
“The wholesale price of lab-grown diamonds can plummet to as low as 1% of their natural counterparts’ value,” Smith said in an emailed statement.
Smith cited three retail prices for a two-carat F VS1 (high quality) lab-grown diamond being offered for sale at $11,375, $2730 and $866. A gem of that size and quality costs between $500 and $759 to make.
“While some companies uphold integrity by selling lab-grown diamonds at fair market value, ensuring equitable competition, others exploit the situation for profit.
Diamond “growing” machines in India. “Some retailers inflate prices by as much as 1200%, potentially driven by a desire to maintain the narrative that they are not different from natural diamonds, otherwise they may be considered too cheap and therefore undesirable, or to capitalize on trends at the expense of consumers.”
If Smith is right and lab-grown diamonds are currently being sold at inflated profit margins, the ease with which they are produced will ensure an increase in supply, resulting eventually in a price crash.
When that happens the value of the once-great De Beers business will fade, and the appeal to a mining company like BHP will disappear — if it succeeds in acquiring Anglo American.
Diamond output for De Beers slumped 23 per cent in the first quarter, as production was cut in response to a slow recovery in demand amid a pullback in luxury spending and the proliferation of lab-grown equivalents.
De Beers was the only unit of Anglo American to adjust its full-year production forecast on Tuesday, reducing its guided range to 26mn to 29mn carats of output, from 29mn to 32mn, and lifting expected average costs to $90 per carat, from $80.
Anglo American said the diamond market was suffering from a price rout caused by excess piles of inventory, something that De Beers has previously acknowledged is partly down to lab-grown diamonds cannibalising demand for mined stones.
“Ongoing uncertainty around economic growth prospects has led to a continued cautious purchasing approach” by its customers, Anglo American said. “The recovery in rough diamond demand is expected to be gradual through the rest of the year,” it added.
De Beers said a nascent recovery had begun in the first quarter, buoyed by improved demand for diamond jewellery around Christmas and new year in the US.
Diamond producers including De Beers’ arch-rival, Russia’s Alrosa, tried to curb the flow of gemstones into the market in the second half of last year. The Indian government even put on a voluntary import moratorium on rough stones in the final quarter to protect its polishers and cutters.
Despite those continued efforts into this year, demand, prices and the market recovery remains sluggish, Anglo said, requiring further action to be taken to reduce supply.
Anglo American chief executive Duncan Wanblad has been under pressure to improve performance since a production downgrade in December sent shares tumbling, although it has been aided by higher commodity prices, especially for copper.
Wanblad has said that “nothing is off the table” when it comes to asset sales or other options to restructure units, of which De Beers and the platinum group metals division are the most troubled.
“We are progressing through our asset review to optimise value by simplifying and improving the overall quality of the portfolio,” he said in a statement in the first-quarter production update on Tuesday.
Shares in Anglo American dropped 1.7 per cent in early trading in London and remain about a third lower than they were at the start of 2023.
Besides diamonds, the London-based company managed to maintain its guidance across its other commodities such as copper, iron ore and steelmaking coal.
Copper output jumped 11 per cent to 198,100 tonnes, helped by record throughput at its Quellaveco mine in Peru and higher grades at its Chilean mines Collahuasi and El Soldado.
South Africa, where Anglo American has iron ore, steelmaking coal and platinum mines, has become an increasing drag on production because of crippling problems in the logistics and power sector. Rail constraints resulted in a 2 per cent drop in output at Kumba Iron Ore.
De Beers has increased prices of small rough diamonds for the second consecutive sight as a combination of demand and supply factors continue to create a hot market for the category.
Prices for tiny stones rose by around 10% on average at this week’s trading session, with sharper advances in certain segments, customers and insiders estimated Monday. The changes were mainly for minus-7 sieve sizes, which weigh about 0.03 carats, across a range of qualities. De Beers was unavailable for comment.
The February sale runs this week from Monday to Friday in Gaborone, Botswana.
Rough under 0.75 carats became a sought-after asset in the second half of 2022 as melee demand from luxury brands strengthened and Indian manufacturers needed cheaper material to fill factories amid thin profit margins. In addition, Western sanctions on Russian diamonds created a mixture of real and perceived shortages in those sizes, for which Alrosa is the biggest supplier. The trade is watching for potential further restrictions as the one-year anniversary of Russia’s invasion of Ukraine approaches.
“Are people preempting what the [new] measures might be on Russia? [The strong market] might have to do with that,” a rough-market participant told Rapaport News on condition of anonymity.
Last year, De Beers made only modest increases in the prices of smalls, even when the segment saw robust demand, a sightholder explained on condition of anonymity. The miner raised prices at last month’s sight by approximately 10% — alongside decreases in the slower, larger goods.
The fresh hikes caught many dealers by surprise, as they were expecting De Beers to monitor the Chinese recovery before making further price adjustments.
