Summary of Key Issues
De Beers, the world's largest natural diamond producer, is facing challenging times: despite an increase in rough diamond sales, its revenue has declined for four consecutive years (mainly due to a 32% drop in prices and a higher proportion of lower-quality, smaller diamonds). To address these difficulties, the company has cut nearly one-third of its core buyers and focused its supply on larger purchasers. It has also seen competition from synthetic diamonds, forcing it to shut down its Lightbox brand for cultured diamonds. Its parent company, Anglo American Resources, is considering selling off 85% of De Beers' shares, which could lead to a change in ownership. Additionally, De Beers is taking self-help measures such as closing mines, reducing store locations, and shifting to a higher-end market strategy in an attempt to maintain its position in the natural diamond industry.
I. Increased Sales but Lower Profits: The Problem Lies in Price and Quality
In the first half of 2026, De Beers sold 13% more rough diamonds than last year (from 11 million carats to 12.4 million carats), yet its revenue decreased by 24% (from $1.7 billion to $1.3 billion). Why?
- Sharp Price Drops: The average price of rough diamonds fell from $155 per carat to $105 per carat, a decrease of 32%.
- Decline in Quality: A larger volume of lower-quality diamonds was sold, dragging down the overall average price. In other words, although more diamonds were sold, they were less valuable, resulting in lower profits.
II. Cutting Nearly One-Third of Buyers: De Beers is Selecting Its Customers More Closely
90% of De Beers' rough diamond sales are made through long-term partners known as "viewers." In July this year, after new contracts took effect, the company reduced the number of viewers from 69 to 45 and lowered prices for several categories of diamonds.
Why this change? The market is weak, and demand is low. By focusing on larger buyers with stronger purchasing power (who can purchase more and pay quickly), De Beers aims to sell its limited supply more efficiently and reduce inventory pressure. This strategy is akin to "selecting the best candidates" to allocate resources to more reliable customers.
III. Synthetic Diamonds Compete for Market Share: De Beers Cannot Stand Alone
The production of synthetic diamonds has increased dramatically in recent years, rising from 1.4 million carats in 2018 to 15.9 million carats in 2024—an tenfold increase. Synthetic diamonds look almost identical to natural ones but are much cheaper, directly impacting the natural diamond's image of scarcity and exclusivity.
De Beers previously launched the Lightbox brand for cultured diamonds, priced at $800 per carat in 2018. However, due to a 90% drop in wholesale prices, the company had to shut down this brand in 2025. Now, it is focusing its synthetic diamond business on industrial applications (such as semiconductors) and returning to its core natural diamond products.
IV. Parent Company Plans to Sell Shares: De Beers May Change Owners
Anglo American Resources, De Beers' parent company, announced plans to sell off its shares in 2024. In July, progress was made when the Botswana government (which holds 15% of the shares) revealed that a consortium led by the former CEO has been identified as the preferred buyer for 85% of the shares. The Botswana government has the right of first refusal, and the transaction is expected to be completed in the fourth quarter of 2026.
Why the sale? De Beers' performance has been poor, with a loss of $113 million in the first half of the year (although less than last year), and the parent company no longer wishes to bear this financial burden.
V. Self-Help Measures: Closing Mines, Reducing Stores, and Moving to a Higher-End Strategy
To survive, De Beers has made several adjustments:
- Cost Reductions: It has paused the expansion of its Canadian mine and shut down the South African mine for two years, saving over $100 million in operating costs.
- Brand Rebranding: The company renamed its jewelry brand from De Beers Jewellers to De Beers London, focusing on a luxury, higher-end market. The Forevermark brand has shifted to direct sales of high-end diamonds in India.
- China Market Adjustment: It has reduced the number of stores in China from 25 to 16, although China remains its largest global market due to its historical diamond consumption.
- Emphasizing Naturalness: De Beers has launched the "ORIGIN" initiative to provide consumers with information about the origin and ownership of its diamonds, highlighting the uniqueness and scarcity of natural diamonds and distinguishing them from synthetic ones.
In summary, De Beers is facing both internal challenges (slowing performance) and external threats (competition from synthetic diamonds) as well as the possibility of being sold off. Whether its self-help measures will be successful depends on whether demand for natural diamonds recovers and whether its higher-end strategy can appeal to consumers.