25 Feb 2024

After strong demand in 2021 and 2022, global rough diamonds demand fell significantly in 2023, says De Beers Group executive vice president, Mr Paul Rowley.

However, Mr Rowley said during the fourth quarter of 2023 industry conditions started to stabilise and that demand improved over the holiday season, especially in the United States of America thereby helping to ease mainstream inventory pressure.

Delivering the De Beers Group 2023 financial results last Thursday, Mr Rowley said as polished diamonds inventories were rising and increasing inflation and interest rates, jewellery retailers took a cautious approach towards purchasing new stock.

Mr Rowley also said with the ongoing macro-economic uncertainty, it was anticipated that the recovery in rough diamonds demand would be gradual. He added although industry conditions were expected to remain challenging in the short-term the long-term outlook was favourable.

He said anticipating a measured approach from producers to release the upstream inventory during 2024, the high midstream inventory levels seen in 2023 were expected to decline as retailers replenished their stock.

Mr also Rowley said from 2022 to 2023, revenue decreased to US$4.3 billion as compared to US$6.6 billion in 2022, adding that in 2023 rough diamonds sales decreased to US$3.6 billion from the previous year’s US$6 billion.

In total, he said rough diamonds sales decreased by 19 per cent to 24.7 million carats as compared to 2022 at 30.4 million carats. He noted that the strong rough diamonds demand in 2021 and 2022 was followed by a decline in 2023 as a result of, among other factors, a sluggish post-pandemic recovery in China, increasing inflation and interest rates in the USA impacting on consumer spending and competition from lab-grown diamonds.

He said the US consumer demand for natural diamonds was impacted by macro-economic challenges as well as rising supply of lab-grown synthetic diamonds.

Mr Rowley also noted that De Beers capital expenditure increased by 5 per cent to US$623 million in 2023 compared to 2022 at US$593 million, adding that the increase was due to the ramp-up of the Venetia underground project as well as the execution of other life extension projects, including Jwaneng Mine Cut-9.

Mr Rowley also said the wholesale lab-grown diamond prices continued to fall sharply, supporting further differentiation from natural diamonds.

He said in China economic challenges have led to slow consumer confidence which resulted in marginal consumer demand. In contrast, Mr Rowley said consumer confidence and demand in India were robust towards the end of 2023.

In addition, Mr Rowley said DeBeers and Botswana have signed an agreement setting out the terms for a new 10-year sales agreement for Debswana’s rough diamond production through to 2034 and a new 25 year mining licence going through to 2054.

He added that they were working together to progress and implement a new sales agreement, including mining licences.

“In the interim, the terms of the most recent sales agreement remain intact,” he said.

Mr Rowley was also of the view that the ongoing focus on diamond provenance, especially given the expected introduction of Russian diamonds import restrictions by the G7 nations, had the potential to reinforce the demand for DeBeers Group rough diamonds.

He said global supply of rough diamonds was also anticipated to continue to decline owing to the maturity of major mines and limited new discoveries.

Despite the challenging environment, Mr Rowley said DeBeers would continue to invest in the future and that the long-term future was looking positive.

He said through their Tracr system they would continue to reinforce the security of diamonds, and that the system was the solution to the traceability of the diamonds origin.Mr Rowley said the recovery in rough diamond demand was expected to be gradual with an expected return to growth by 2025, adding that it was important to continue telling the positive story of natural diamonds by highlighting its positive impact to livelihoods.

Mr Rowley said although going through a difficult year, DeBeers would continue supporting structures aimed at improving livelihoods.

“Continue telling the natural diamonds story. Say the good that it does to the lives of the people,” he said.ENDS