Diamond miner De Beers’ earnings before interest, taxes, depreciation and amortisation (Ebitda) for the six months ended June 30 decreased by 27% year-on-year to $518-million.

Challenging trading and economic conditions in the period under review contributed to the lower Ebitda.

The diamond miner cited a number of challenges for rough diamond sales in the reporting period, resulting from cyclical factors, changing industry dynamics and macroeconomic challenges.

De Beers, led by CEO Bruce Cleaver, said it had maintained discipline on costs, while delivering progress on its key projects and initiatives.

The company added that the impacts of some challenges were likely to be short term, while it predicted a healthier industry outlook over the long term.

As a result of the headwinds experienced in the reporting period, De Beers’ revenue was 17% lower year-on-year at $2.6-billion, while rough diamond sales declined by 21% year-on-year to $2.3-billion.

Production of 15.6-million carats was 11% lower in the reporting period, compared with the 17.5-million carats produced in the prior comparable period, and sales of 15.5-million carats were 13% lower in the reporting period.

As a result of weaker demand experienced in the period, additional production was not ramped up to compensate for the Venetia mine’s transition from openpit to underground.

As previously reported, the company revised down its production guidance for the full-year to 31-million carats, at the lower end of the previous range of between 31-million and 33-million carats, in response to the weaker trading conditions.

De Beers stated that US demand for rough diamonds had been subdued in the reporting period on the back of stock market volatility late in 2018 and ongoing trade tensions between the US and China.

Polished diamond demand, and midstream rough diamond demand, was impacted on by retail store closures and destocking in the US.

Additionally, demand outside of the US was impacted on by the trade tensions, protests in Hong Kong and a stronger US dollar, which particularly affected China and the Gulf.

De Beers said underlying gross domestic product growth remained supportive of consumer demand growth and was expected to bring midstream and retailer stocks back to more normalised levels in 2020, subject to an improving macroeconomic environment.

Some of the company’s major progress on projects and initiatives included construction of a new diamond recovery vessel for subsidiary Debmarine Namibia and subsidiary Debswana starting its cut-9 project to extent Jwaneng's mine life, in Botswana.

Additionally, De Beers progressed well with its Venetia mine underground project, while it successfully launched its Forevermark brand in Italy, meaning it was now available in about 2 400 retail outlets globally.

During the reporting period, the company expanded its Gemfair artisanal and small-scale mining initiative to more than 50 sites and received positive consumer responses to its Lightbox fashion jewellery initiative. 

“While changes to the face of jewellery retail, midstream financing and inventory dynamics/demand have impacted on rough diamond demand, the sector is expected to become more efficient as a result once these changes have completed.

“Diamond jewellery demand in the US, which is the largest consumer market, remains positive, and consumer demand in India is improving,” De Beers stated.