Latest Group news

Financial and operational metrics⁽¹⁾

	Production volume	Sales volume	Price	Unit cost*	Group revenue*	Underlying EBITDA*	EBITDA margin(6)	Underlying EBIT*	Capex*	ROCE*
	’000 cts	’000 cts(2)	$/ct(3)	$/ct(4)	$m(5)	$m		$m	$m
De Beers	16,520	15,303	163	63	2,831	347	50  %	190	302	5  %
Prior period	16,884	15,329	213	59	3,595	944	53 %	718	250	11  %
Botswana	12,728	n/a	175	30	n/a	274	n/a	242	30	n/a
Prior period	11,705	—	189	32	—	333	—	295	31	—
Namibia	1,231	n/a	550	223	n/a	102	n/a	84	20	n/a
Prior period	1,016	—	632	292	—	93	—	78	19	—
South Africa	1,205	n/a	130	68	n/a	54	n/a	50	202	n/a
Prior period	2,916	—	147	39	—	227	—	162	169	—
Canada	1,356	n/a	89	46	n/a	23	n/a	1	32	n/a
Prior period	1,247	—	97	60	—	2	—	(25)	19	—
Trading	n/a	n/a	n/a	n/a	n/a	61	2  %	58	1	n/a
Prior period	—	—	—	—	—	401	12 %	398	1	—
Other(7)	n/a	n/a	n/a	n/a	n/a	(167)	n/a	(245)	17	n/a
Prior period	—	—	—	—	—	(112)	—	(190)	11	—

⁽¹⁾  Prepared on a consolidated accounting basis, except for production, which is stated on a 100% basis except for the Gahcho Kué joint operation in Canada, which is on an attributable 51% basis.

⁽²⁾ Total sales volumes on a 100% basis were 17.3 million carats (30 June 2022: 17.3 million carats). Total sales volumes (100%) include De Beers Group’s joint arrangement partners’ 50% proportionate share of sales to entities outside De Beers Group from Diamond Trading Company Botswana and Namibia Diamond Trading Company.

⁽³⁾ Pricing for the mining businesses is based on 100% selling value post-aggregation of goods. Realised price includes the price impact of the sale of non-equity product and, as a result, is not directly comparable to the unit cost.

⁽⁴⁾  Unit cost is based on consolidated production and operating costs, excluding depreciation and operating special items, divided by carats recovered.

⁽⁵⁾  Includes rough diamond sales of $2.5 billion (30 June 2022: $3.3 billion).

⁽⁶⁾  Total De Beers EBITDA margin shows mining EBITDA margin on an equity basis, which excludes the impact of non-mining activities, third‑party sales, purchases, trading downstream and corporate.  

⁽⁷⁾ Other includes Element Six, brands and consumer markets, and corporate.

Markets

The high levels of polished diamond inventory in the midstream coming into 2023, as well as the ongoing macro-economic headwinds, impacted demand for rough diamonds. The anticipated rebound in Chinese demand following the removal of Covid-19 restrictions was impacted by a large wave of infections during the first quarter of 2023, which dampened consumer confidence. Amid the slow polished sector during the first half of 2023, midstream inventories have continued to build, with profitability under strain from softening polished prices and higher financing costs.

Operational performance

Mining

Rough diamond production was broadly flat, compared to a strong first half of 2022, at 16.5 million carats (30 June 2022: 16.9 million carats), reflecting strong operational performance in most regions, offset by the planned reduction in South Africa as the Venetia open pit transitions to underground operations.

In Botswana, production increased by 9% to 12.7 million carats (30 June 2022: 11.7 million carats), driven by the planned treatment of higher grade ore at Orapa.

Namibia production increased by 21% to 1.2 million carats (30 June 2022: 1.0 million carats), primarily driven by the contribution from the Benguela Gem vessel, which commenced production in March 2022, and the ongoing ramp-up and expansion of the mining area at the land operations.

South Africa production decreased by 59% to 1.2 million carats (30 June 2022: 2.9 million carats), due to the planned completion of the Venetia open pit in December 2022. Venetia continues to process lower grade surface stockpiles, which will result in temporary lower production levels as it transitions to underground operations, where first production was recently achieved. It will ramp-up over the next few years as development continues.

Production in Canada increased by 9% to 1.4 million carats (30 June 2022: 1.2 million carats) as the treatment of higher grade ore offset planned plant maintenance.

Financial performance

Total revenue decreased to $2.8 billion (30 June 2022: $3.6 billion), with rough diamond sales decreasing to $2.5 billion (30 June 2022: $3.3 billion) reflecting the softening in demand. Total rough diamond sales volumes of 15.3 million carats were in line with the prior period (30 June 2022: 15.3 million carats), as a result of a higher proportion of lower value rough diamonds being sold in 2023. This impacted the average realised price in the first half of the year, which decreased by 23% to $163/ct (30 June 2022: $213/ct), and reflects the more cautious approach Sightholders took to planning their 2023 allocation schedule due to the uncertain macro-economic outlook. The average rough diamond price index also decreased by 2%, reflecting the overall softening in consumer demand for diamond jewellery and build-up in rough diamond inventory in the midstream.

Underlying EBITDA decreased by 63% to $347 million (30 June 2022: $944 million), driven by the lower
average realised price and higher unit costs. Unit costs increased by 7% at $63/ct (30 June 2022: $59/ct),
as lower production volumes, higher inflation and input costs were partially offset by the benefits of favourable exchange rates.

Capital expenditure increased by 21% to $302 million (30 June 2022: $250 million), largely due to the Venetia underground project as well as the continued execution of life-extension projects.

De Beers and the Government of the Republic of Botswana have reached an agreement in principle on a new
10-year sales agreement for Debswana’s rough diamond production (through to 2033) and the new 25-year Debswana mining licences (through to 2054). Whilst the implementation of the formal sales agreement and mining licences is being finalised, the terms of the most recent sales agreement (which expired on 30 June) will remain in place. The new arrangements between De Beers and the Government of Botswana constitute a related party transaction under the UK Listing Rules, given that both Anglo American and the Government of Botswana are shareholders in De Beers, and therefore will be subject to approval by Anglo American's shareholders in due course.

Brands and consumer markets

The underlying demand for branded diamond jewellery remains strong. Despite the ongoing macro-economic uncertainty, De Beers Jewellers delivered a solid first half performance with double digit growth in bridal and collections and continues to focus on developing the brand in China.

Operational and market outlook

Macro-economic conditions are expected to remain challenging over the near term, impacting consumer spending on diamond jewellery.

Diamond provenance continues to grow in importance for stakeholders throughout the diamond value chain. In June 2023, De Beers announced that the Tracr™ blockchain platform would open to participants across the diamond industry. Having immutable data at scale about a diamond’s journey from the source is a major step forward and will underpin consumer confidence in natural diamonds and their provenance. The increased focus on diamond provenance by many retailers and global brands in key markets has the potential to reinforce continued demand for De Beers’ rough diamonds in the medium and longer term.

Despite near term challenges faced by the diamond industry, our research confirms consumers’ desire for natural diamonds, which is expected to remain robust in key consumer markets in the long term. The global supply of rough diamonds is expected to decline owing to limited new discoveries, which in turn is expected to support value growth potential for natural diamonds.

2023 Guidance

Production guidance for 2023 is 30–33 million carats (100% basis), subject to trading conditions.

2023 unit cost guidance is c.$75/ct.