Production cut at De Beers as diamond output decreases following slow recovery

Diamond output for De Beers took a hit in the first quarter, with a 23% slump in production as the company responded to a slow recovery in demand. This decrease comes amidst a pullback in luxury spending and the rise of lab-grown diamond alternatives.

De Beers, a unit of Anglo American, adjusted its full-year production forecast, reducing the guided range to 26-29 million carats of output from 29-32 million. Additionally, the expected average costs per carat were raised to $90 from $80. The diamond market is currently facing a price rout due to excess inventory, with lab-grown diamonds contributing to the decline in demand for mined stones.

Despite efforts by diamond producers to curb the flow of gemstones into the market, demand, prices, and the overall market recovery remain sluggish. Anglo American CEO Duncan Wanblad has been under pressure to improve performance, with potential asset sales or restructuring options on the table.

Shares in Anglo American dropped 1.7% in early trading in London, remaining significantly lower than at the start of 2023. However, the company managed to maintain its guidance for other commodities such as copper, iron ore, and steelmaking coal. Copper output saw a significant increase, while challenges in South Africa impacted production at iron ore and coal mines.

Overall, the diamond industry continues to face challenges as it navigates through uncertain economic conditions and changing consumer preferences. The road to recovery for De Beers and other diamond producers may be long and require further adjustments to adapt to the evolving market landscape.