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De Beers plans return to marketing roots as split from Anglo American looms GEMSTONES
BY BLAIR MCBRIDE
De
Beers, which created the global market for diamond engagement rings through its "A Diamond is Forever" campaign, is shifting back to its marketing roots as its parent company Anglo American (LSE: AAL) moves to sell it off. Its new ‘Origins’ strategy is part of a wider pivot back towards natural diamonds, announced on May 31. The move makes sense because marketing has always set the diamond sector apart from other segments of mining, and it can’t afford to ignore the demand creation side, New York City-based diamond analyst Paul Zimnisky told The Northern Miner. “Marketing is what moves the needle,” he said. “You can throw money at the problem, you can create demand if the products are marketed properly. You have to look at it as a luxury product, not as a commodity.” In announcing the divestiture of De Beers on May 14, Anglo American said the move would give both companies “a new level
| Miner pushes ‘Origins’ plan as sales, production slow
“There’s little interest in the diamond sector from an equity perspective. I don’t see how in a potential IPO there’s enough interest in a new diamond story.” RAJ RAY, BMO CAPITAL MARKETS MINING ANALYST
of strategic flexibility to maximize value” for Anglo and Botswana, which holda 15% stake, in the diamond company. Since then, Botswana’s government has indicated that it wants to increase that stake. High capital needs and declining diamond supply present further challenges in the diamond sector, analysts say.
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Anglo’s announcement of its De Beers plans, as well as plans to sell off its South Africa-based Anglo American Platinum (JSE: AMS) and its steelmaking coal assets was triggered by BHP’s (ASX: BHP) unsuccessful, multi-billion-dollar acquisition bid in mid-May. ‘Growing desire’ De Beers is also suspending its Element Six lab-grown diamonds (LGD) subsidiary for jewelry to focus instead on synthetic diamond technology for industrial applications, it said in late May. Production for the Lightbox LGD brand will stop in a few months, De Beers CEO Al Cook said in a June 13 interview with diamond news site Rapaport. Cook explained to Rapaport the need to tell better diamond stories is greater now that “there are more diamonds above the surface of the Earth than below the surface. Every year, diamond mines are closing.” In a separate news release, Cook said the outlook for natural diamonds is “compelling,”, adding that the company’s new approach will involve “growing desire for natural diamonds through the reinvigoration of category marketing, embracing new approaches that maximize reach and impact.” De Beers first entered the synthetic diamond jewelry market in 2018. To differentiate mined from lab-grown diamonds in consumers’ minds and position mined
Above: Haul trucks at the Jwaneng diamond mine, held by a 50-50 joint venture of De Beers and the government of Botswana. ANGLO AMERICAN
Left: A rough diamond. DE BEERS GROUP PM44082538
gems as the premium product, the company initially offered Lightbox jewelry for up to 80% less than its competitors’ prices. Slowing sales, production The stronger emphasis on marketing also comes as De Beers grapples with lower sales, with its most recent rough diamond sale reported on May 23, bringing in US$380 million — down by 20% from last year’s US$479 million for the same two-week period. Cook said the sales were due to the seasonally slower second quarter and less trading in India during the elections. Production declined 8% to 31.9 million carats in 2023, from 34.6 million carats in 2022. First quarter output this year, at 6.8 million carats, was down 23% from the year-earlier figure of 8.9 million carats. DE BEERS 12 >
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