De Beers halts Venetia output amid diamond slump

De Beers plans to suspend production at its Venetia diamond mine in South Africa for two years as weak rough-stone prices and persistent trading pressures force the group to deepen cost cuts across its global operations.

The proposed shutdown at the Limpopo mine will be accompanied by a rescheduling of capital expenditure on the underground project, which was developed at a cost of about $2.3 billion. The company will continue investing in critical infrastructure during the pause to improve the mine’s capacity and efficiency before production resumes.

The timing of the suspension will be confirmed after consultations with employees and other stakeholders. De Beers said it would support affected workers and maintain its commitments to neighbouring communities under its Social and Labour Plan.

Venetia is South Africa’s largest diamond mine and the only producing mine operated by De Beers in the country. It accounted for about 740,000 carats in the first quarter of 2026, a 53 per cent increase from the same period a year earlier as larger volumes of underground ore were processed.

The mine contributed roughly a tenth of De Beers’ total production during the quarter. Its output is dominated by smaller and lower-value diamonds, a category that has been particularly exposed to falling prices, excess inventories and changing demand patterns across the global jewellery market.

De Beers intends to adjust production at its other operations to cover any international supply shortfall caused by the Venetia pause. The company has kept its 2026 production guidance unchanged at between 21 million and 26 million carats.

Chief executive Al Cook said the measures were designed to strengthen resilience while protecting the company’s ability to expand when trading conditions improve. He acknowledged that the industry remained under prolonged pressure but pointed to signs of stronger consumer demand in the United States and other markets, particularly for higher-quality stones.

Rough diamond trading has been weakened by slower luxury spending, geopolitical uncertainty, tariffs and the expansion of laboratory-grown diamonds. Demand from China, once one of the fastest-growing jewellery markets, has remained subdued as economic concerns and changing consumer preferences weigh on purchases.

De Beers’ average realised rough diamond price fell 19 per cent year on year to $101 a carat during the first quarter. Its rough price index declined 17 per cent, reflecting weaker market values and the sale of a larger proportion of lower-priced goods.

The group sold 7.7 million carats during the quarter and generated consolidated rough diamond revenue of $648 million. Although volumes and revenue increased from a year earlier, the lower average price highlighted the continuing strain on profitability.

Venetia’s diamonds achieved an average value of about $66 a carat last year, compared with approximately $110 a carat for production from Botswana and $353 a carat for stones recovered in Namibia. The difference has encouraged De Beers to concentrate investment on assets that produce scarcer and more valuable diamonds.

The suspension forms part of a broader restructuring launched under the company’s Origins strategy. Since 2024, De Beers has removed more than $100 million in annual overhead costs, sold or closed non-core assets and revised several mine expansion programmes.

The company also paused the Tuzo Phase 3 expansion at the Gahcho Kué mine in Canada earlier this year. Its global operating structure will now be reorganised to focus resources on core mining, trading and retail businesses while reducing central corporate expenses.

De Beers has continued spending on marketing campaigns intended to defend natural diamonds against laboratory-grown alternatives. It said global consumer demand for natural diamond jewellery returned to growth in 2025, with sales through independent jewellers in the United States rising during that year and the first quarter of 2026.

The recovery has been concentrated in larger and higher-quality stones. Lower-value diamonds have remained vulnerable to competition from laboratory-grown products, whose retail prices have fallen sharply as manufacturing capacity has expanded.

The production decision also comes as parent company Anglo American seeks to sell its controlling stake in De Beers. The divestment is part of a wider restructuring intended to concentrate Anglo American’s portfolio on copper and premium iron ore.

De Beers recorded a loss of $511 million in 2025, while Anglo American cut the carrying value of the diamond business by $2.3 billion. The impairment followed earlier writedowns as the prolonged market downturn reduced expected earnings and complicated the sale process.