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De Beers Group has amassed its largest diamond stockpile since the 2008 financial crisis, underscoring the group’s challenge to revive demand for jewelry long seen as the pinnacle of luxury.
A slowdown in Chinese demand, intense competition from lab-grown alternatives and a legacy of pandemic lockdowns, while the number of weddings has dropped, has left the world’s largest diamond producer by revenue with inventory worth about $2 billion.
The scale of the stockpile, which was not previously reported, hovered around the $2 billion mark for much of the year, according to the company.
“It’s been a bad year for rough diamond sales,” said chief executive Al Cook.
The Covid pandemic has forced a prolonged decline in demand De Beers Taking measures to prevent the supply of precious stones. It cut production from its mines by about 20 percent from last year’s levels and cut prices in its latest auction this month.
Auctions are used to sell rough, or cut, diamonds to a group of about 50 certified buyers known as sightholders, who are the most powerful dealers in the industry.
With a 20,000-strong workforce, De Beers has been a dominant force in the $80 billion diamond jewelery market since its founding in the late 19th century. Group revenue fell to $2.2 billion in the first half of this year, compared with $2.8 billion in the same period in 2023.
Its biggest rival was Russia’s Alrosa Hurt by prohibition This year the G7 nations have put a cap on the Russian diamond after a full-scale invasion of Ukraine in 2022.
A diamond market battle ensued to spin off De Beers as a separate company by its owner, Anglo American. The FTSE 100 mining group has pledged to offload De Beers this year after fending off a £39bn takeover bid from rival BHP.
Anglo chief executive Duncan Oneblood warned that the disposal of De Beers, either through a sale or an initial public offering, could be complicated by weak diamond market conditions.
In an effort to increase sales, De Beers Launch a marketing push October focused on “natural diamonds,” echoing its famous advertising campaigns of the second half of the 20th century.
Cook, who will lead De Beers from February 2023, said that as the group prepares to close, it will increase investment in advertising and retail, including expanding its network of stores globally to 100 from 40 today.
“The relaunch of this massive campaign in category marketing. . . I think this is an early indicator of what an independent De Beers will look like,” Cook added.
“As we become independent, we have the freedom to focus on marketing as much as we focused on mining,” he said. “This seems to me to be the right time to drive marketing and sell our brand and retail, even as we reduce capital and expenses on the mining side.”
Warm demand in China has been a significant drag this year. A sign of weakness in a market that usually imports diamondThe country’s jewelers have resorted to exporting polished stones to reduce their own stocks.
Competition has also increased from lab-grown diamonds that cost about one-twentieth the price of a natural stone, especially in the United States. The country is the world’s largest diamond market and accounts for nearly half of industry sales.
Cook insisted that next year could bring a “gradual recovery” globally, including in the US.
“We are seeing emerging signs of retail recovery [in the US] in October and November,” he said this month, pointing to credit card data that showed an increase in purchases of jewelry and watches.
Paul Zimnisky, an independent industry analyst, said De Beers’ rough diamond sales were on track to fall by about 20 percent this year after falling 30 percent in 2023.
“Given the low base, any recovery in trade should result in some relative growth in 2025,” he said, adding that he expected global diamond jewelry sales to rise about 6 percent to $84 billion next year.
