De Beers Slashes Diamond Production Forecasts
(Bloomberg) -- Anglo American Plc will mine significantly fewer diamonds this year than it previously planned to, as the biggest supplier of the gems contends with a complete shutdown of the global supply chain.
The coronavirus pandemic has crippled the diamond trade. India’s cutting industry, which handles almost all of the world’s stones, has come to a halt. At the same time, diamond purchases in the key U.S. market have tumbled as retailers closed stores. Botswana, where Anglo’s De Beers unit sells its stones, has also blocked travelers from the key diamond-buying centers.
The outbreak has come at a terrible time for an industry already reeling from a disastrous 2019. Profits collapsed last year after a glut of rough and polished stones destroyed margins for the industry’s crucial middlemen who cut, polish and trade them.
De Beers cut its production forecast by 7 million carats for this year, to between 25 million and 27 million carats.
“At De Beers, lockdown measures have significantly impacted diamond production in southern Africa, manufacturing in India and retail operations in the United States,” the company said in a statement.
Anglo American has also followed rivals in looking to conserve cash. The miner will lower its capital spending by $1 billion this year and cut operational spending by $500 million, it said Thursday.
At the company’s Quellaveco copper project in Peru, non-critical work will be suspended for up to three months, Anglo said. The cost of the mine will probably rise to the upper end of its $5 billion to $5.3 billion range, though it still expects to start producing in two years’ time.
The rest of Anglo’s business, which includes commodities such as copper, iron ore and coal, has so far been more resilient than diamonds. Still the company announced reductions to its output goals from mines in South Africa, where it’s been forced to curb operations.
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