De Beers’ Sales Nearly Double, Production Remains Subdued

London--De Beers saw sales nearly double in the second quarter but the miner and marketer continues to hold back on production due to the subdued nature of the global diamond market.

Parent company Anglo American reported Wednesday that De Beers produced 6.4 million carats of diamonds in the second quarter 2016, down from 8 million carats in the second quarter 2015. That’s a drop of 19 percent.

The steepest decline came from De Beers Canada, where the Snap Lake Mine has been shut down until further notice. Second quarter production in Canada was down 71 percent year-over-year.

Production dropped 31 percent in Namibia, 26 percent in South Africa and 12 percent in Botswana.

The company’s full-year guidance remains unchanged at 26 to 28 million carats, but is subject to trading conditions.

While production dropped for De Beers, the miner and marketer’s sales shot up in the second quarter, as diamond manufacturers sought to restock after cutting back on inventory levels last year.

Consolidated rough diamond sales in the second quarter nearly doubled, totaling 9.6 million carats from three sights, compared with 4.9 million carats from two sights in the second quarter 2015.

While the additional sight contributed to the increased sales, so did “higher midstream restocking from lower inventory levels in 2015,” De Beers said.

Consolidated sales volumes in the first half of the year were 17.2 million carats, up from 13.3 million carats for the first half of 2015. Five sights took place during each period.

The De Beers rough price index was, on average, 16 percent lower in the first half of 2016 compared with the first half of 2015, with the average realized price of $144 per carat down 14 percent from 2015.

For Rio Tinto, which mines diamonds in Australia and Canada, second quarter production was up 3 percent year-over-year at its flagship mine, the Argyle. Production there was up 3 percent from the first quarter 2016 and has risen 4 percent on the year.

Rio Tinto continues to ramp up its underground operations at the mine, with the higher ore volumes being processed partially offset by lower grades.

At the Diavik mine in Canada, second quarter production plummeted 26 percent year-over-year and was down 16 percent from the first quarter due to a planned maintenance shutdown at the plant.

Rio Tinto reduced its guidance on diamond production on the year, from 21 million