De Beers amasses biggest diamond stockpile since 2008 financial crisis

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De Beers Group has amassed its largest stockpile of diamonds since the 2008 financial crisis, revealing the group’s challenge to revive demand for jewellery, long considered the pinnacle of luxury.

Declining Chinese demand, intensifying competition from lab-grown alternatives and a legacy of pandemic lockdowns that have seen marriages fall have left the world’s biggest diamond producer with about $2 billion worth of reserves.

The stockpile, which was not previously reported, hovered around the $2 billion mark for most of the year, according to the company.

“It was a bad year for rough diamond sales,” said CEO Al Cook.

The long-term decline in demand started by the Covid pandemic has forced De Beers take measures to curb the supply of precious stones. It cut output from its mines by about 20 percent from last year’s levels and cut prices in its latest auction this month.

Auctions are used to sell rough or rough diamonds to a group of about 50 certified buyers, known as video dealers, who are the industry’s most powerful dealers.

With a workforce of 20,000, De Beers has been a dominant force in the $80 billion diamond jewelery market since it was founded in the late 19th century. from $8 billion.

Its biggest competitor, the Russian “Alrosa”, was were punished with sanctions After a full-scale invasion of Ukraine in 2022, Russian diamonds were imposed by the G7 countries this year.

The diamond market woes come as De Beers is set to be spun off by its owner, Anglo American, with the FTSE 100 mining group vowing to offload De Beers from rival BHP this year. after application.

Anglo chief executive Duncan Wanblad warned that a divestment of De Beers, either through a sale or an initial public offering, could be complicated by the weak state of the diamond market.

De Beers to promote sales launched a marketing push focused on “natural diamonds” in October, echoing its famous advertising campaigns of the second half of the 20th century.

Cook, who heads De Beers from February 2023, said that as the group prepares to exit, it will boost investment in advertising and retail, including expanding its store network to 100 worldwide from 40 today.

“The relaunch of this huge category marketing campaign . . I think this is a very early indicator of what an independent De Beers will look like,” Cook added.

“Because we’re independent, we have the freedom to focus on marketing as much as we’ve focused on mining,” he said. and spending on mining.”

Low demand in China has fallen significantly this year in a sign of weakness in the market, which usually imports diamondsthe country’s jewelers resorted to exporting polished stones to reduce their own stocks.

Competition from lab-grown diamonds, which cost about one-twentieth that of natural stone, has also increased, particularly in the U.S. The country is the world’s largest diamond market and accounts for half of the industry’s sales.

Cook argues that next year could bring a “gradual recovery” around the world, including in the US.

“We are seeing emerging signs of a retail recovery [in the US] in October and November,” he said this month, pointing to credit card data that showed an increase in purchases of jewelry and watches.

De Beers’ rough diamond sales will fall by about 20 percent this year, after seeing a 30 percent drop in 2023, independent industry analyst Paul Zimnisky said.

“Given the low base, any recovery in trade should lead to some relative growth in 2025,” he said, adding that he expects global diamond jewelry sales to grow about 6 percent to $84 billion next year.