Diamond sales drop at Anglo American's De Beers

Anglo American said on Tuesday that the value of rough diamond sales at its De Beers business fell in the second cycle of the year.

Sales declined to $490m from $500m in the first cycle and $563m in the second cycle of last year.

De Beers chief executive officer Bruce Cleaver said: "Demand for rough diamonds remained consistent during the second sales cycle of 2019. While overall demand for lower value rough diamonds remain subdued we did see an increase in demand from India as factories begin to restock."

RBC Capital Markets analyst Tyler Broda said: "Today’s result shows that the restock following the seasonally busy Christmas period has underwhelmed and sales so far are tracing out well below previous periods.

"The market remains in the process of rebalancing following a pop in supply from smaller mines from 2017-18, although with Rio’s lower value Argyle mine coming offline in the next couple of years, this should help to restore balance.

"In terms of impact to Anglo, there is potential that they are holding back sales from lower value diamonds, which would mean profitability would not necessarily be as impacted, but this is clearly not a positive sign. We expect De Beers to produce $1.4bn in EBITDA of a total $10.5bn on the product level or 13% of group."

At 0825 GMT, Anglo shares were down 0.1% to 2,004.50p.