De Beers has suffered its worst year of diamond sales in almost a decade as the global pandemic led to a collapse in demand.
The miner reported 2020 sales of $2.7bn, the lowest level since at least 2011 when its was acquired by mining group Anglo American and worse than during the financial crisis in 2009 when De Beers sold $3.84bn worth of stones.
Diamond sales plummeted in the first half of this year as efforts to limit the spread of coronavirus kept millions of people at home and dented demand in the largest markets of the US and China.
Restrictions on travel also hampered the ability of De Beers to sell its products. The company was forced in March to cancel its regular sales events in Botswana because of travel restrictions, although it has since then sold diamonds to foreign buyers in Antwerp, Dubai and Israel.
Bruce Cleaver, chief executive, said consumer demand for diamonds was improving ahead of the holiday season, with sales at its final “sight” sales event in December hitting a provisional figure of $440m, 3 per cent higher than in the same period last year. De Beers sells its diamonds 10 times a year at so-called sights to preapproved buyers known as sightholders.
However, he cautioned that the effects of the pandemic would persist.
“While the diamond industry ends the year on a positive note, we must recognise the risks that the ongoing Covid-19 pandemic presents to sector recovery both for the rest of this year and as we head into 2021,” Mr Cleaver said.
The company and Russia’s Alrosa, the world’s largest producer, have reduced the amount of diamonds available to buyers in an attempt to hold up prices, analysts say.
That has helped prices to rise as consumer demand returns and companies restock their inventories, according to Anish Aggarwal, a partner at consulting firm Gemdax.
“We expect this to continue until the second quarter of 2021,” he said. “At that point the supply chain will be restocked and economies will have opened up a bit. Only then we’ll have a clearer idea of where the market’s going to go longer term.”
While prices for small diamonds remain weak, those for larger one-carat stones have risen 1.6 per cent since the beginning of October, according to pricing provider Rapaport.
Analysts at Citigroup said diamond sales should “recover significantly” next year as consumer demand returned. DeBeers’ sales in the past three cycles averaged $450m, the bank said, the highest level since mid-2019.