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De Beers Group has amassed its biggest diamond haul since the 2008 financial crisis, highlighting the group's challenge in reviving demand for gems long seen as a luxury item.
Declining Chinese demand, intensifying competition from lab-grown alternatives and the legacy of the pandemic ban, when the number of weddings fell, left the world's largest diamond producer with a list of revenues worth about $2 billion.
The size of the stockpile, which has not been reported before, is around 2bn points for most of the year, according to the company.
“It was a bad year for the rough diamond market,” said chief executive Al Cook.
The long-term decline in demand that began with the Covid pandemic has forced it Anglo gold ashanti to take measures to prevent the supply of precious stones. It has cut production at its mines by about 20 percent from last year's levels and lowered prices at its latest auction this month.
Auctions are used to sell rough, or uncut, diamonds to a group of approximately 50 certified buyers known as spotters, who are the industry's most powerful dealers.
With 20,000 employees, De Beers has been the dominant player in the 80 billion dollar diamond jewelry market since it was founded in the late 19th century. Group revenue fell to $2.2bn in the first half of this year, from $2.8bn in the same period in 2023.
Its biggest rival, Alrosa of Russia, was to be punished placed in Russia's diamonds by the G7 nations this year following a full-scale invasion of Ukraine in 2022.
The diamond market's struggles come as De Beers is set to be spun off into a separate company by its owner, Anglo American. The FTSE 100 mining group has pledged to offload De Beers after defending a £39bn takeover bid from controversial BHP this year.
Anglo chief executive Duncan Wanblad has warned that disposing of De Beers, either through a sale or an initial public offering, could be difficult due to the weakness of the diamond market.
In an effort to increase sales, De Beers launch promotional advertising in October focused on “natural diamonds”, describing its popular marketing campaigns in the second half of the 20th century.
Cook, who has led De Beers since February 2023, said that as the group prepares for dissolution, it will increase investment in advertising and marketing, including expanding the network of stores to 100 worldwide, from 40 today.
“Restarting this great marketing campaign . . . I think this is the first indication of what an independent De Beers will look like,” Cook added.
“Since we are independent, we have the freedom to focus on marketing as strongly as we have focused on mining,” he said. “This to me feels like the right time to drive sales and get back to our brands and sales, as we cut costs and spend on the mining side.”
Urgent demand in China has been a significant pull this year. It is a sign of the weakness of the often import market diamondsthe country's jewelers have resorted to exporting polished stones to reduce their reserves.
Competition from lab-grown diamonds, which cost about one-twelfth that of natural stones, has also grown, particularly in the US. The country has the largest diamond industry in the world and accounts for half of the industry's sales.
Cook insists that next year could bring a “gradual recovery” around the world, including the US.
“We are seeing emerging signs of a recovery in sales (in the US) in October and November,” he said this month, pointing to credit card data showing increases in jewelry and watch purchases.
Paul Zimnisky, an independent industry analyst, said De Beers' diamond sales are on track to decline by about 20 percent this year, after falling 30 percent by 2023.
“Because of the low base, any recovery in the trade should result in some growth in 2025,” he said, adding that he expects global diamond jewelry sales to increase by about 6 percent to $84 billion next year.