De Beers Faces Financial Losses in First Half of 2026 Amid Slumping Rough Diamond Prices and Market Volatility
The global diamond industry is navigating a period of profound structural and economic transformation, as evidenced by the latest financial projections from Anglo American, the parent company of De Beers. In its most recent quarterly production report, Anglo American disclosed that De Beers is expected to report negative underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first half of 2026. This forecast follows a significant downturn in rough-diamond sales during the second quarter, highlighting the persistent challenges facing the natural diamond sector, ranging from macroeconomic instability to the rising prominence of lab-grown alternatives.
According to the report, De Beers’ consolidated rough-diamond revenue—which excludes sales from its various joint-venture partners—plummeted by 44% year-on-year to $665 million for the three months ending June 30. This decline occurred despite a relatively stable number of sales events, known as "sights," with the company holding three during the quarter, consistent with the previous year’s schedule. However, the volume and value of the goods moved during these sights told a story of a market in retreat. Consolidated sales volume dropped 11% to 6 million carats, while total sales volume, including joint ventures, fell 7% to 7.1 million carats.
A Drastic Decline in Realized Pricing
Perhaps the most striking metric in the report was the collapse in realized prices. The average selling price for De Beers’ diamonds fell by 37% year-on-year to $110 per carat on a consolidated basis. Even when accounting for like-for-like fluctuations through De Beers’ average price index—which attempts to strip out the effects of changing inventory mixes—the data showed a 17% dip.
For the full six-month period ending June 30, the financial picture remained bleak. While consolidated sales volume actually rose by 13% to 12.4 million carats (and total sales volume advanced 20% to 14.8 million carats), total revenue for the half-year slipped 23% to $1.31 billion. This discrepancy between rising volume and falling revenue is attributed to a significant shift in the "sales mix." Anglo American explained that the company sold a much higher proportion of lower-value stones during the first half of the year. This was largely a result of the current inventory available to the company, which includes a surplus of smaller, less valuable diamonds that have been harder to move in previous cycles.
The average consolidated selling price for the first half of 2026 slid 32% to $105 per carat. This figure was also impacted by a 16% decline in the average rough-price index. Notably, this index now reflects the aggressive "cut-price" inventory sales that De Beers conducted in late 2025 to clear stock. However, it does not yet account for the further price reductions implemented during the July 2026 sight, suggesting that further downward pressure on margins may be realized in the second half of the year.
Macroeconomic Pressures and Geopolitical Headwinds
The diamond market does not operate in a vacuum, and the current downturn is inextricably linked to broader global instability. Anglo American’s report emphasized that "rough-diamond trading conditions remained challenging" throughout the first half of 2026. The geopolitical landscape remains a primary concern for luxury goods manufacturers and retailers alike. The ongoing conflict in the Middle East has added a new layer of risk to global consumer confidence, particularly in key markets that drive diamond demand.
In addition to geopolitical strife, the industry is grappling with the lingering effects of inflation and high interest rates in Western economies, which have curtailed discretionary spending on high-end jewelry. While the first quarter of 2026 saw a brief uptick in sales following strategic price cuts, that momentum failed to carry through the second quarter. The "uncertain macroeconomic landscape" mentioned by Anglo American reflects a broader hesitation among midstream players—the cutters and polishers—to take on new rough inventory when polished diamond prices remain soft and financing costs remain high.
The Lab-Grown Diamond Disruption
A critical factor in the erosion of the natural diamond market share is the continued growth of the lab-grown diamond (LGD) sector. De Beers acknowledged that man-made stones continue to impact demand for lower-value natural diamonds. This impact is most visible in the price-sensitive categories, where consumers are increasingly opting for larger or higher-clarity lab-grown stones at a fraction of the cost of their natural counterparts.
This "cannibalization" of the lower end of the market has forced De Beers and other natural diamond producers to pivot their marketing strategies. There is a growing emphasis on the "rarity" and "inherent value" of natural stones, attempting to decouple them from the mass-produced nature of LGDs. However, the data suggests that for the time being, the availability of cheap lab-grown alternatives is setting a ceiling on how much De Beers can charge for its smaller, commercial-grade rough stones. Interestingly, the report noted that "stronger pricing for higher-value goods supported a stable overall average price index throughout the period," suggesting that the ultra-luxury segment—comprising large, high-quality natural diamonds—remains somewhat insulated from the LGD surge.
Production Surges and Strategic Pauses
While sales and revenue have struggled, De Beers’ production figures showed a significant spike in the first half of the year. Production jumped 88% year-on-year to 7.8 million carats in the second quarter and gained 46% to 14.9 million carats for the first half.
However, these figures require context. The massive year-on-year increase is partly due to a "favorable comparison" with 2025, a year characterized by an extended maintenance shutdown at the Orapa mine in Botswana. The 2026 surge also reflects planned mining of higher-grade ore at the Jwaneng mine in Botswana and the Gahcho Kué mine in Canada.
Despite this production boost, De Beers is not planning to flood the market. The company’s production guidance for the full year remains unchanged at 21 million to 26 million carats. To maintain this target and align supply with sluggish demand, De Beers has announced a two-year production pause at the Venetia mine in South Africa. Furthermore, planned maintenance at the Orapa and Jwaneng deposits in Botswana will counterbalance the first-half surge. This disciplined approach to supply is a hallmark of De Beers’ strategy to prevent a total collapse in rough diamond prices during periods of low demand.
Corporate Restructuring: The Anglo American Divestment
The financial struggles of De Beers come at a pivotal moment for its corporate identity. Anglo American is currently in the process of a massive structural overhaul, which includes the divestment of its 85% stake in De Beers. This move follows a period of corporate defense, during which Anglo American fended off a multi-billion dollar takeover bid from rival BHP. As part of its strategy to "unlock value" for shareholders, Anglo American is shedding non-core assets to focus on copper, iron ore, and crop nutrients.
While the production report did not explicitly confirm recent rumors regarding a preferred bidder, industry speculation is at an all-time high. Reports emerged last week suggesting that a consortium led by former De Beers CEO Gareth Penny has been selected as the preferred bidder. Penny, who led De Beers from 2006 to 2010, is seen by many as a steady hand who understands the complexities of the "Diamond Pipeline."
Duncan Wanblad, CEO of Anglo American, addressed the situation cautiously, stating that the parent company is "progressing the sale process for De Beers, while concurrently advancing streamlining opportunities to improve cost performance and reduce capital expenditure to minimize the impact from challenging diamond markets." This streamlining is essential, given that De Beers’ financial performance has been on a downward trajectory; the company recorded an underlying EBITDA loss of $511 million for the full year of 2025, a stark contrast to the $25 million loss in 2024.
Industry Implications and Future Outlook
The projection of a negative EBITDA for H1 2026 serves as a stark reminder of the volatility inherent in the luxury commodity sector. For De Beers, the path forward involves navigating a "perfect storm" of high inventory, shifting consumer preferences, and corporate transition.
The industry will be watching closely to see if the "value over volume" strategy can stabilize the market. By curtailing production at major sites like Venetia and Orapa, De Beers is attempting to create an artificial scarcity that might eventually bolster prices once the global economy stabilizes. However, this strategy relies on the assumption that consumer desire for natural diamonds remains resilient in the face of LGD competition.
Furthermore, the potential sale to a consortium led by Gareth Penny could signal a return to a more traditional, diamond-focused management style, free from the broader diversified mining priorities of Anglo American. A standalone De Beers might have more flexibility to engage in the aggressive marketing campaigns needed to revitalize the "natural diamond" brand, much like the "A Diamond is Forever" campaigns of the 20th century.
In the immediate term, the focus remains on the second half of 2026. The industry will look for signs of a recovery in the Chinese market—traditionally a massive driver of diamond demand—and a stabilization of retail sentiment in the United States. Without a significant rebound in these areas, the "red" on De Beers’ balance sheet may become a recurring feature rather than a temporary setback. For now, the diamond giant remains in a defensive crouch, waiting for the macroeconomic clouds to clear while preparing for a new chapter under potentially new ownership.
