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PRODUCTION REPORT FOR THE SECOND QUARTER OF 2018

19 Jul 2018

De Beers1

Q2
2018
Q2
2017
Q2
2018
vs.
Q2
2017
Q1 2018 Q2 2018
vs.
Q1 2018
H1
2018
H1 2017 H1
2018
vs.
H1
2017

Botswana
(Debswana)

000 carats

6,279

5,993

6%

5,808 8%

12,087

11,124

9%

Namibia
(Namdeb Holdings)

000 carats

515

391

32%

528 (2)%

1,044

863

21%

South Africa
(DBCM)

000 carats

1,018

1,405

(28)%

1,093 (7)%

2,111

2,511

(16)%

Canada

000 carats

1,185

1,013

17%

1,069 11%

2,253

1,644

37%

Total carats recovered

000 carats

8,997

8,742

3%

8,498 6%

17,495

16,142

8%

Rough diamond production increased by three per cent to 9.0 million carats reflecting production increases to meet stronger demand as well as the contribution from the ramp-up at Gahcho Kué.

Botswana (Debswana) production increased by six per cent to 6.3 million carats in response to stronger trading conditions. Jwaneng production increased by four per cent to 3.0 million carats due to an increase in tonnes mined and treated. Similarly at Orapa2 production increased by eight per cent to 3.3 million carats due to the ramp up of additional processing capacity in response to stronger trading conditions.

Namibia (Namdeb Holdings) production increased by 32 per cent to 0.5 million carats driven by access to consistently higher grades at the land operations and technology-led optimisation of the marine drill fleet.

South Africa (DBCM) production decreased by 28 per cent to 1.0 million carats, primarily owing to a period of suspended production at Venetia following a fatal incident in March.

Canada production increased by 17 per cent to 1.2 million carats due to the completion of the ramp-up at Gahcho Kué.

Rough sales volumes were 10.0 million carats (9.4 million carats on a consolidated basis3) from three sales cycles in Q2 2018, compared with 5.9 million carats (5.4 million carats on a consolidated basis3) from two sales cycles in Q2 2017. In addition to the different number of sales cycles over the period, sales volumes benefited from positive sentiment in the midstream following growth in consumer demand for diamond jewellery in late 2017, and a continuing positive outlook.

The H1 2018 average realised rough diamond price increased by four per cent to $162/carat (H1 2017: $156/carat) due to a 1.6 per cent increase in the average rough price index and an improvement in the sales mix, driven by the substantial volumes of lower value goods sold in H1 2017, following the Indian demonetisation programme in late 2016. Excluding this impact, the average value of the production mix was lower in H1 2018 as a higher proportion of lower value carats was delivered from Orapa and Gacho Kué.

Full Year Guidance

Full year production guidance1 remains unchanged at 34-36 million carats, subject to trading conditions.

1 De Beers production is on a 100% basis, except for the Gahcho Kué joint venture, which is on an attributable 51% basis.
2 Orapa constitutes the Orapa Regime, which includes Orapa, Letlhakane and Damtshaa.
3 Consolidated sales volumes excludes De Beers’ JV partners’ 50% proportionate share of sales to entities outside De Beers from Diamond Trading Company Botswana and the Namibia Diamond Trading Company, which are included in total sales volume (100% basis). Q2 2017 includes pre-commercial production sales volumes from Gahcho Kué.