De Beers will pause production at South Africa’s largest diamond mine for two years as the company moves to cut costs amid prolonged challenges in the global diamond market.
The diamond giant announced on Monday that operations at the Venetia Mine, South Africa’s largest diamond producer by value, will be temporarily suspended while the company adjusts to weaker demand and changing market conditions.
De Beers Pauses Production at Venetia Mine
According to the company, rough diamond trading conditions are expected to remain difficult in the near term as production slows across the industry and several mining operations reduce output or shut down.
As part of its cost saving strategy, De Beers said it will pause production at the Venetia Mine for two years while also rescheduling capital spending on its underground expansion project.
The company said the move is aimed at improving business resilience during a challenging period for the global diamond industry.
Diamond Industry Faces Market Pressure
The decision comes as natural diamond producers continue to face increasing competition from laboratory grown diamonds, which have gained popularity in recent years due to their lower prices.
De Beers is majority owned by British mining company Anglo American, which is currently seeking to sell its stake in the business as it restructures its operations.
The company noted that the natural diamond market continues to experience difficult trading conditions despite signs of improving consumer demand in some regions.
Venetia Mine Plays Major Role in South Africa
Located near South Africa’s borders with Botswana and Zimbabwe, the Venetia Mine has been operated by De Beers for more than three decades.
The mine contributes more than 40 percent of South Africa’s annual diamond production and remains the country’s largest diamond mine by value.
Approximately 4,400 employees work at the mining operation.
In 2012, De Beers began developing an underground mining project at Venetia to access diamond deposits located more than 1,000 metres below the surface. The company had previously projected annual production of about four million carats once the underground operation reached full capacity.
Cost Cutting Measures Continue
The temporary suspension at Venetia follows another major decision earlier this year when De Beers paused the Tuzo Phase 3 expansion project at the Gahcho Kué Mine in Canada.
Chief Executive Officer Al Cook said the company is implementing several measures to strengthen its business while protecting long term value.
Cook acknowledged that the diamond industry continues to face prolonged market challenges but said there are encouraging signs of stronger consumer demand, particularly in the United States and for higher quality natural diamonds.
The company believes the latest cost reduction measures will help position the business for future growth as global market conditions improve.
