⁽¹⁾  Prepared on a consolidated accounting basis, except for production, which is stated on a 100% basis except for the Gahcho Kué joint operation in Canada, which is on an attributable 51% basis.
⁽²⁾  Total sales volumes on a 100% basis were 12.7 million carats (30 June 2023: 17.3 million carats). Total sales volumes (100%) include DBD Group’s joint arrangement partners’ 50% proportionate share of sales to entities outside DBD Group from Diamond Trading Company Botswana and Namibia Diamond Trading Company.
⁽³⁾  Pricing for the mining businesses is based on 100% selling value post-aggregation of goods. Realised price includes the price impact of the sale of non-equity product and, as a result, is not directly comparable to the unit cost.
⁽⁴⁾  Unit cost is based on consolidated production and operating costs, excluding depreciation and operating special items, divided by carats recovered.
⁽⁵⁾  Includes rough diamond sales of $2.0 billion (30 June 2023: $2.5 billion).
⁽⁶⁾  DBD EBITDA margin includes the impact of mining as well as non-mining activities, third‑party sales, purchases, trading, brands and consumer markets and corporate. Mining EBITDA margin for DBD is 40% (30 June 2023: 50%).
⁽⁷⁾  DBD’ attributable ROCE is based on the prior 12 months, rather than the annualised half year performance, owing to the seasonality of sales and underlying EBIT profile of DBD.
⁽⁸⁾  Other includes Element Six, brands and consumer markets, and corporate.

Commenting on the first half of 2024, DBD Group CEO Al Cook said: “Rough diamond trading conditions continue to be challenging. Although demand in the US has been steady and India remains robust, consumers in China are buying substantially fewer luxury products. Retailers are very cautious as they restock, creating higher than normal levels of midstream inventory.

“Despite these conditions, DBD made great progress in delivering our Origins strategy during the first half of the year. We have streamlined the business, materially reducing our costs and ensuring we are best placed to grow value from mining to stores as conditions improve. We’re revitalising demand for natural diamonds for a new generation of consumers through our collaborations with Signet, Chow Tai Fook and other leading jewellery retailers. And we continue to support consumer confidence in natural diamonds, with high demand for our new DiamondProof lab-grown diamond detection instrument.

“While we expect the challenging rough diamond trading conditions to continue in the near-term, the actions we are taking will support the recovery in natural diamond demand and position DBD well for the future.”

Markets

Following a challenging 2023, demand for rough diamonds recovered slightly at the start of 2024 following the cessation of the voluntary moratorium on rough diamond imports into India in late 2023 and improved demand for diamond jewellery over the year-end retail selling season in the United States. However, with midstream polished inventories remaining higher than normal and continued cautious restocking from retailers, demand for rough diamonds deteriorated in the second quarter of the year.

Global consumer demand for natural diamond jewellery in the first half of 2024 experienced very different trends within the key consumer countries. In China, the ongoing economic challenges, particularly within the property market and low consumer confidence, have delayed the expected recovery from the sharp decline in 2023, with jewellery retailers largely selling from existing stocks rather than placing new orders. Consumer demand in the United States continued to be affected by economic uncertainty, soft consumer confidence and lab-grown diamonds. Conversely, in India, strong economic growth underpinned positive natural diamond jewellery demand growth.

The bifurcation of natural and lab-grown diamonds accelerated. Wholesale lab-grown diamond prices continue to fall with retailers, including Lightbox Jewelry, having to repeatedly reduce their prices to remain competitive, affecting their top-line performance and shifting retailer financial incentives increasingly towards natural diamond jewellery.

Operational performance

Mining

Rough diamond production reduced to 13.3 million carats (30 June 2023: 16.5 million carats). This reflects the decision to intentionally lower production and change short term plant feed mix in response to the weaker rough diamond demand due to the higher than average levels of inventory in the midstream and cautious retailer restocking.

In Botswana, production was reduced by 24% to 9.7 million carats (30 June 2023: 12.7 million carats), driven by intentional lower production and short-term changes in plant feed at Jwaneng and Orapa.

Namibia production decreased by 3% to 1.2 million carats (30 June 2023: 1.2 million carats), with planned lower production at Debmarine Namibia, partially offset by planned mining of areas with higher grades and recoveries at Namdeb.

South Africa production decreased by 8% to 1.1 million carats (30 June 2023: 1.2 million carats), due to planned processing of lower grade stockpiles at Venetia whilst the underground operations ramp-up over the next few years.

Production in Canada was broadly flat at 1.3 million carats (30 June 2023: 1.4 million carats).

Financial performance

Total revenue decreased to $2.2 billion (30 June 2023: $2.8 billion), with rough diamond sales decreasing to $2.0 billion (30 June 2023: $2.5 billion). Total rough diamond sales volumes decreased by 22% to 11.9 million carats (30 June 2023: 15.3 million carats). The average realised price is broadly flat at $164/ct (30 June 2023: $163/ct), reflecting a larger proportion of higher value rough diamonds being sold, offset by a 20% decrease in the average rough price index.

Underlying EBITDA decreased to $300 million (30 June 2023: $347 million), driven by reduced sales volumes and high unit costs due to intentional lower production and the ramp up of Venetia underground. Earnings benefitted from strategic progress on announced business streamlining, with a fair value gain of $127 million recognised in the period in relation to a non-diamond royalty right.

DBD has focused on managing its rough diamond inventory levels through the softer trading conditions by reducing production to supply into demand.

Capital expenditure decreased by 13% to $264 million (30 June 2023: $302 million), reflecting phasing of life extension spend for the Venetia underground project. Investment in the ramp-up of the Venetia underground project continues as well as the execution of other life-extension projects, including Jwaneng Cut-9.

DBD and the Government of the Republic of Botswana have previously signed Heads of Terms setting out the key terms for a new 10-year sales agreement for Debswana’s rough diamond production (through to 2034) and the new 25- year Debswana mining licences (through to 2054). DBD and the Government of Botswana are working together to progress and then implement the formal new sales agreement and related documents including the mining licences. In the interim, the terms of the most recent sales agreement remain in place. The new arrangements constitute a related party transaction for the purposes of the current UK Listing Rules given the Government of the Republic of Botswana holds a 15% interest in DBD and is therefore deemed a related party of Anglo American. In line with the requirements under the current UK Listing Rules, Anglo American had previously communicated that the new arrangements would be subject to approval by Anglo American’s shareholders. As part of the recently announced changes to the UK Listing Rules which come into effect on 29 July 2024, not only has the requirement for shareholder approval been removed with respect to related party transactions, the threshold at which a shareholder is deemed a related party has been increased from 10% to 20%. This means that from 29 July 2024 the new arrangements will not require approval by Anglo American’s shareholders and will cease to qualify as a related party transaction for the purposes of the new UK Listing Rules. As such, Anglo American does not propose to seek shareholder approval for the new arrangements.

Corporate strategy

DBD communicated its new Origins strategy at the end of May, with a focus on four key pillars underpinned by a plan to streamline the business sustainably by reducing overhead costs by $100 million per year. These comprised i) focusing upstream investments on the major projects that will deliver the highest returns; ii) integrating the midstream to deliver greater efficiency; iii) resetting the downstream by reinvigorating category marketing and evolving proprietary brands through scaling up DBD and refocusing Forevermark solely on the fast-growing Indian market; and iv) pivoting synthetics, with Lightbox suspending production of lab-grown diamonds for jewellery allowing Element Six to focus on its position as a world-leading provider of synthetic diamond technology solutions.

Brands and consumer markets

DBD delivered positive performance in design-led pieces across high jewellery and collections, while bridal and solitaire demand remained challenged by macro-economic headwinds and slower Chinese recovery.

New natural diamond marketing collaborations were established with world-leading diamond jewellery retailers: Signet in the US and Chow Tai Fook in China. The collaborations focus on driving long term desirability for natural diamonds in two of the world’s leading consumer countries for natural diamonds. The collaborations will also benefit from promotional messages being amplified through the wide reach of these leading retail businesses.

DBD also announced the introduction of DiamondProof, a new device to be used on the jewellery retail counter for rapidly distinguishing between natural diamonds and lab-grown stones, supporting retailers in communicating the attributes of natural diamonds, providing customers with enhanced confidence in the authenticity of their natural diamond purchase and deterring undisclosed lab-grown diamonds from entering the natural supply chain.

Market outlook

Weaker demand is expected to continue for some time, given the prevailing levels of midstream inventories. This is expected to be followed by a gradual recovery as demand from the United States, India and other countries draws down midstream inventories. Retailer re-stocking is expected to be supported by new natural diamond marketing, increasing engagement rates, improving macro-economic conditions and consumer confidence.

The wholesale prices of lab-grown diamonds continue to fall, exacerbated by ballooning stocks of lab-grown diamonds in India. In turn, lab-grown diamond retail prices remain on a downward trajectory, and it is expected that these trends will further reinforce consumers’ understanding of the fundamental differences between lab-grown and natural diamond jewellery. Given the rapidly deteriorating economics of selling lab-grown diamonds as their prices continue to drop, there are also signs that retailers in the United States are returning their focus to natural diamonds.

In addition, there is a growing focus on diamond provenance which has the potential to reinforce demand for DBD’ ethically sourced rough diamonds, supported by provenance data registered on the blockchain Tracr™ platform, particularly given enhanced sanctions on Russian diamond import restrictions by G7 nations expected to be introduced in September 2024.

Operational outlook

Venetia is processing lower grade surface stockpiles while the operation transitions to underground. This will continue as the underground production slowly ramps up following the first production blast in mid-2023. It is expected to ramp up to steady-state levels of c.4 million carats per annum production over the coming years.

Production in 2026 is expected to benefit from an expansion project at Gahcho Kué (Canada).

Near term unit cost will be impacted by a low carat profile from Venetia as the underground project ramps up and is subsequently expected to reach a steady-state of c.$75/ct from 2026.

Production guidance for 2024 has been revised lower to 23–26 million carats (previously 26–29 million carats), following the finalisation of discussions with our production partners, as the business responds to the prolonged period of lower demand, higher than normal levels of inventory in the midstream, and a focus on working capital. Production remains subject to trading conditions.

2024 unit cost guidance is consequently revised to c.$95/carat⁽¹⁾ (previously c.$90/carat). The first half unit cost of $85/carat is lower than this guidance, reflecting the impact of lower production volumes in the second half of the year.

⁽¹⁾  Unit cost is based on DBD' share of production volume. 2024 unit cost guidance was set at c.19 ZAR:USD.