De Beers Cuts Diamond Target by 1 Million Carats as Demand WiltsThomas Biesheuvel
De Beers, the world’s largest diamond producer, lowered its 2015 output target for the second time this year as demand for the gems continues to weaken.
De Beers cut its full-year goal to 29 million to 31 million carats from an earlier target of 30 million to 32 million carats. At the start of the year, the Anglo American Plc unit was planning to mine as much as 34 million carats.
“We think it is adequate,” said De Beers Chief Executive Officer Philippe Mellier, commenting on the new target. He told investors on Friday that he expects the market to be “stable” in dollar terms compared with last year.
De Beers and other diamond producers are under pressure to cut supply and lower prices as traders, cutters and polishers struggle to turn a profit amid a squeeze on credit and as jewelry sales languish. Buyers in India, where almost 90 percent of stones are cut and polished, threatened to ban imports this month amid complaints about a supply glut.
“It’s been a tough couple of months,” Anglo CEO Mark Cutifani told investors. “The market is currently tightening up. We’ve seen a flattening of demand.”
De Beers reported first-half sales of $3.02 billion on Friday after mining 15.6 million carats. De Beers contributed $360 million of underlying earnings to Anglo American, more than a third of the mining company’s profit.
“Clearly the second half is going to be a tougher period,” Cutifani said.
Anglo owns 85 percent of De Beers with Botswana controlling the rest.