Strong demand for rough diamonds continued in the third quarter of 2022. De Beers Group, the world’s largest producer by value continued to leverage on this, producing according to the demand and enjoying good sales figures.
On Wednesday, the diamond mining behemoth which sources majority of its rough diamonds from Botswana announced the value of rough diamond sales (Global Sightholder Sales and Auctions) for its seventh sales cycle of 2022, amounting to $630 million (Over P7.5 billion). This provisional figure, though slightly lower than the cycle 6 actual value of $638 million, it is 20 percent higher than the 2021 cycle 7 figure of $522 million.
Owing to the restrictions on the movement of people and products in various jurisdictions around the globe, De Beers Group says it continued to implement a more flexible approach to rough diamond sales during the seventh sales cycle of 2022, with the Sight event extended beyond its normal week-long duration.
As a result, the provisional rough diamond sales figure quoted for Cycle 7 represents the expected sales value for the period 15 August to 30 August and remains subject to adjustment based on final completed sales.
Commenting on the sales results Bruce Cleaver, Chief Executive Officer of De Beers Group, noted that the Group’s rough diamond sales continued at a steady level in the seventh sales cycle of 2022, he however highlighted that for the next cycles figures are expected to be lower.
“In line with normal seasonal trends, we anticipate that sales in the next few cycles will be affected by the temporary closure of polishing factories for the Diwali holidays.” He said.
De Beers reported financial results for the first half of 2022, with revenue going up by 24 percent to $3.6 billion (over P40 billion) from $2.9 billion (over P35 billion) in June 2021 and rough diamond sales rising to $3.3 billion (30 June 2021: $2.6 billion), as the midstream replenished their stocks following strong consumer demand over the holiday season.
Rough diamond sales volumes totalled 15.3 million carats (30 June 2021: 19.2 million carats), with the prior period benefiting from very strong demand recovery following the impact of Covid-19 in 2020. The average realised price rose by 58 percent to $213/ct (30 June 2021: $135/ct), driven by a larger proportion of higher value rough diamonds sold, as well as growth in the De Beers rough diamond price index.
The rough price index increased by 28 percent compared with the same period in the prior year, reflecting positive consumer demand for diamond jewellery as well as tightness in inventories across the diamond value chain.
Underlying EBITDA increased by 55 percent to $944 million (30 June 2021: $610 million), reflecting the recovery in sales. Unit costs were flat at $59/ct (30 June 2021: $59/ct) as the benefit of higher production was offset by rising inflation and input costs. Capital expenditure increased by 22% to $250 million (30 June 2021: $205 million), largely due to a ramp-up in the Venetia Underground project, ahead of first production in 2023.
In mining, De Beers said rough diamond production increased by 10 percent to 16.9 million carats (30 June 2021: 15.4 million carats), reflecting a strong operational performance and higher planned levels of production to meet continued strong demand for rough diamonds, while the first quarter of 2021 was affected by particularly high rainfall in Botswana and at Venetia.
In Botswana, production increased by 10 percent to 11.7 million carats (30 June 2021: 10.7 million carats) owing to increased processing at both Orapa and Jwaneng, as well as planned higher grade at Orapa.
“The Government of the Republic of Botswana and De Beers Group have extended their existing agreement for the sale of Debswana’s rough diamond production by 12 months until 30 June 2023,” said the company.
“Following further positive progress towards a new agreement being made in the first half of 2022, the two parties have agreed to the one-year extension to enable the finalisation of the ongoing discussions.”
In Namibia production increased by 50 percent to 1.0 million carats (30 June 2021: 0.7 million carats) primarily due to continued strong performance from the new diamond recovery vessel, the Benguela Gem, in the first quarter of 2022.
In South Africa production increased by 20 percent to 2.9 million carats (30 June 2021: 2.4 million carats) due to the treatment of higher grade ore from the final cut of the open pit at Venetia.
Production in Canada decreased by 22 percent to 1.2 million carats (30 June 2021: 1.6 million carats), primarily as a result of treating lower grade ore and Covid-19 related absenteeism.
The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.
Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.
According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.
The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.
Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.
Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the companyâ€™s market capitalization.
Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana. Â The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.
African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).
AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.
The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.
To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. â€śOur wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,â€ť said BĂ¸rge Brende, President, and World Economic Forum. â€śThe Forumâ€™s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.â€ť
Given the continentâ€™s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. â€śThe promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,â€ť said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.
The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.
â€śMacro trends in the four key sectors and across Africaâ€™s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,â€ť said Wamkele Mene, Secretary-General, AfCFTA Secretariat.
The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.
About the World Economic Forum Annual Meeting 2023
The World Economic Forum Annual Meeting 2023 convenes the worldâ€™s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,