De Beers plans to dig up more diamonds this year than at any time since the 2008 global financial crisis.
The unit of Anglo American will mine as much as 36 million carats this year, up from 33.5 million in 2017, on gains at its Gahcho Kue mine in Canada. The increase is a positive sign for an industry struggling with flat demand for diamond jewellery of around $80 billion a year since 2014 and subdued prices for polished gems.
“The most important thing when we look at production going forward is to make sure it is matched by demand,” chief financial officer Nimesh Patel said in a Bloomberg TV interview.
De Beers has said economic conditions around the world support consumer demand. Still, its output may fall back to 32 million carats next year as it switches from surface mining to digging underground shafts at its Venetia mine in South Africa.
Some observers warn that the market can’t bear a large increase in supply.
“There could be the early signs of a market turnaround, but this hardly warrants production increases from the majors,” said Ben Davis, an analyst at Liberum Capital Markets in London. “If anything, production discipline has only just started to work and midstream need more margin expansion to be anywhere close to a healthy sustainable market.”
-Bloomberg
