Ivanhoe’s Kipushi zinc mine in DRC officially reopens
The restart marked exactly a century since the mine first went into production.
Not since at least the early 2000s, when De Beers gave up its global monopoly on diamonds, has the company earned so little money.
Underneath all the luxury branding and marketing of brilliant diamonds sold to celebrities and the global elite, De Beers is battling a crisis. That became clearer on Thursday, when the company’s parent released financial results that showed profit at De Beers fell by more than 50% in 2019.
The problem isn’t a lack of customers, but issues deeper in the supply chain. In short: mining companies have dug up too many diamonds. The oversupply has driven prices down and squeezed the low-profile middlemen that cut, polish and trade gems before they’re sold to retailers and jewelers.
There are some early signs that business has started to improve, but the coronavirus could set it all back, said Mark Cutifani, chief executive officer of Anglo American Plc, which owns De Beers.
“There aren’t as many people walking around jewelry shops in China. In Hong Kong, there are virtually none,” he said. “It’ll be a couple of months before we have a better picture.”
In the face of tumbling profits, De Beers is taking a hard look at the business. For example, the company is reviewing the way it sells diamonds and may cut its number of accredited buyers at the end of this year, according to people familiar with the matter.
De Beers has also made unprecedented concessions, both by giving its customers more flexibility and eventually cutting prices.
“I’m actually very proud about what De Beers did in 2019,” said De Beers CEO Bruce Cleaver. “It was not an easy year. We led an industry. We spent a lot of time speaking to customers, to bankers and to retailers to give them confidence that De Beers thinks there’s a great future here.”
For De Beers, it’s a long way back. The miner made $558 million last year, down from a recent peak of $1.8 billion in 2014.
Tracking the company’s earnings history is tricky. The company has moved from private ownership to being controlled by Anglo, and the volume of mined diamonds has declined.
Still, last year was even weaker than 2009, when the financial crisis forced De Beers to seek a $1 billion bailout from shareholders, including Anglo, the Botswana government and Oppenheimer family. The Oppenheimers, who founded De Beers in the 1880s, have since sold out of the company.
(By Thomas Biesheuvel)
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