De Beers Group, facing weakening demand for diamonds, has amassed its largest stockpile since the 2008 financial crisis. The company cites factors like declining Chinese demand, competition from lab-grown diamonds, and the after-effects of pandemic lockdowns as reasons for the slump.
De Beers Group has accumulated its largest diamond stockpile since the 2008 financial crisis, highlighting the company's struggle to revitalize demand for diamonds, long considered the epitome of luxury. A decline in Chinese demand, escalating competition from lab-grown alternatives, and the lingering effects of pandemic lockdowns, which led to a decrease in marriages, have left the world's leading diamond producer by revenue with an inventory valued at approximately $2 billion.
This stockpile size, previously unreported, has remained around the $2 billion mark for much of the year, according to the company. 'It's been a challenging year for rough diamond sales,' stated CEO Al Cook. This prolonged demand slump, originating with the Covid-19 pandemic, has compelled De Beers to implement measures to control the supply of precious stones. It has reduced production from its mines by roughly 20 percent from last year's levels and lowered prices at its latest auction this month. Auctions are the platform used to sell rough, or uncut, diamonds to a select group of approximately 50 certified buyers known as sightholders, who are the industry's most influential dealers. With a 20,000-strong workforce, De Beers has been a dominant player in the $80 billion diamond jewelry market since its establishment in the late 19th century. The company's revenues declined to $2.2 billion in the first half of this year, down from $2.8 billion during the same period in 2022. Its primary competitor, Russia's Alrosa, has been significantly impacted by sanctions imposed on Russian diamonds by the G7 nations this year following the full-scale invasion of Ukraine in 2022. These challenges in the diamond market coincide with De Beers' impending separation into a distinct company by its owner, Anglo American. The FTSE 100 mining group pledged to divest De Beers after successfully resisting a £39 billion takeover bid from rival BHP this year. Anglo's CEO Duncan Wanblad has cautioned that the process of selling or conducting an initial public offering for De Beers could be complicated by the current weakness in the diamond market
DIAMONDS DEMAND DE BEERS STOCKPILE GLOBAL ECONOMY
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