Diamond sales at Anglo's De Beers drop on the year

Anglo American said on Thursday that the value of rough diamond sales at its De Beers unit rose in eighth cycle of the year, but was down significantly on the previous year.

The value increased to $295m from $287m in the seventh cycle, but fell from $482m in the eighth cycle of last year.

De Beers chief executive officer Bruce Cleaver said: "As we approach what is traditionally a quieter time of year for the diamond industry during the Diwali holiday, we have again offered our customers flexibility during this sales cycle."

RBC Capital Markets analyst Tyler Broda said: "We have recently brought our numbers down again for De Beers and now assume an H2 revenue figure of $1.57bn. This works out to an H2 average sight of $315m, largely in range with what's been reported today. We now forecast full year EBITDA of $749m which is 40% lower than 2018.

"Going forward, if history is any guide, De Beers removing meaningful volumes from the market as they did in 2008 and 2015 usually allows for the market to tighten substantially once conditions normalise. This is likely to coincide with Rio Tinto's expected closure of the Argyle mine as it runs out of resource, removing around 15m carat from the 130m carat market. De Beers is also likely to be able to push through some or all of the delayed 2019 production into 2020.

"We remain cautious on the diversified miners sector as a whole. Anglo American continues to screen well in our view with its platinum group metals, and over the next 12 months, likely its diamond exposure. These two differentiated exposures account for circa 35% of our 2020 EBITDA. For now though, the market is likely to continue to take a cautious view on this division."