Debmarine announces 45% price crash
Dire straights
How Debmarine's revenues evaporated in a decade.
Ogone Tlhage
Debmarine’s CEO Willy Mertens at the Chamber of Mines of Namibia expo this week, painted a worrying picture of how a 45% collapse in diamond prices since 2015, has forced the mining giant into cost-cutting mode, as profits continue to decline in the face of increased pressure from lab-grown diamonds and weakened demand.
“We are getting 45% less for a carat than we were getting in 2015, so you need to be resilient to survive,” Mertens said of the pressures facing the offshore miner. “We [are] about 30% down in terms of price in 2015, so what does it do to our earnings before interest, tax, depreciation and amortisation (EBITDA) if you look at it from a peak of about US$6.8 billion, close to $7 billion? At the end of 2022, we reached US$900 000. This is short of a billion at the end of 2024 - all as a result of price,” Mertens said.
To counter for the reduction in demand, the miner is being forced to cut supply as it aims to reduce expenditures, Mertens said.
“We had to respond by reducing volumes, because the market wasn’t taking any of those volumes. That’s almost N$8 billion off our bottom line. We’re currently looking at an outlook of about N$1.5 billion,” Mertens said.
“You can see most of that coming from cost improvements of about N$1.1 billion, because we have done what we could on the volume side. I do not think we can go less than N$1.5 billion in terms of our volumes,” he added.
Despite the slump, Mertens expressed confidence in a rebound which would further be bolstered by the addition of crawlers that were commissioned to replace the company’s ageing fleet.
“The fundamentals for natural dynamics are starting to take place. We believe that we are just in the cycle that’s a little more prolonged than what we are used to. That is why we are investing into new technologies,” Mertens said.
De Beers, Debmarine’s parent company, reported a loss for the first half of the year amid a challenging market, even as it plans to ramp up output over the next two years in expectation of a recovery in the global diamond market, Rapport reported.
The miner reported a deficit of US$245 million for the six months that ended 30 June compared with a profit of US$73 million a year earlier, it said last Thursday. The loss comes as the company sold off some of its rough at low margins to certain sight holders as a means of offloading some of its goods.
De Beers has maintained its production forecast of 20 million to 23 million carats for 2025. However, that figure will grow to between 26 million and 29 million carats next year, and 28 million to 31 million carats in 2027.
Debmarine’s CEO Willy Mertens at the Chamber of Mines of Namibia expo this week, painted a worrying picture of how a 45% collapse in diamond prices since 2015, has forced the mining giant into cost-cutting mode, as profits continue to decline in the face of increased pressure from lab-grown diamonds and weakened demand.
“We are getting 45% less for a carat than we were getting in 2015, so you need to be resilient to survive,” Mertens said of the pressures facing the offshore miner. “We [are] about 30% down in terms of price in 2015, so what does it do to our earnings before interest, tax, depreciation and amortisation (EBITDA) if you look at it from a peak of about US$6.8 billion, close to $7 billion? At the end of 2022, we reached US$900 000. This is short of a billion at the end of 2024 - all as a result of price,” Mertens said.
To counter for the reduction in demand, the miner is being forced to cut supply as it aims to reduce expenditures, Mertens said.
“We had to respond by reducing volumes, because the market wasn’t taking any of those volumes. That’s almost N$8 billion off our bottom line. We’re currently looking at an outlook of about N$1.5 billion,” Mertens said.
“You can see most of that coming from cost improvements of about N$1.1 billion, because we have done what we could on the volume side. I do not think we can go less than N$1.5 billion in terms of our volumes,” he added.
Despite the slump, Mertens expressed confidence in a rebound which would further be bolstered by the addition of crawlers that were commissioned to replace the company’s ageing fleet.
“The fundamentals for natural dynamics are starting to take place. We believe that we are just in the cycle that’s a little more prolonged than what we are used to. That is why we are investing into new technologies,” Mertens said.
De Beers, Debmarine’s parent company, reported a loss for the first half of the year amid a challenging market, even as it plans to ramp up output over the next two years in expectation of a recovery in the global diamond market, Rapport reported.
The miner reported a deficit of US$245 million for the six months that ended 30 June compared with a profit of US$73 million a year earlier, it said last Thursday. The loss comes as the company sold off some of its rough at low margins to certain sight holders as a means of offloading some of its goods.
De Beers has maintained its production forecast of 20 million to 23 million carats for 2025. However, that figure will grow to between 26 million and 29 million carats next year, and 28 million to 31 million carats in 2027.
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