South Africa’s boardrooms have been making some difficult decisions this week. Some companies have reported encouraging financial results, others have continued their turnaround efforts, while De Beers has taken an extraordinary step to protect its global market.
Among the week’s notable developments were:
• De Beers announced it will suspend production at its flagship Venetia mine for two years in an attempt to reduce global diamond supply and support diamond prices.
• Karooooo reported record quarterly operating profit of R410 million as its Cartrack subscriber base grew to more than 2.8 million.
• iOCO continued its turnaround, lifting EBITDA by 150% while reducing net debt by almost 60%.
• Accelerate Property Fund returned to positive distributable earnings after last year’s loss, although it will again pay no distribution.
• TotalEnergies South Africa commissioned a 216 MW solar and battery storage project, adding significant new renewable energy capacity to South Africa’s electricity network.
Of all these announcements, however, it was De Beers’ decision that stood out. Suspending production at one of the world’s premier diamond mines is not simply another cost-cutting exercise. It is a calculated attempt to influence the global supply of diamonds and, ultimately, their price.
The Venetia mine is no ordinary operation. Opened in 1992, it has become South Africa’s largest diamond producer by value and accounts for about 40% of the country’s annual diamond production. To place such a strategic asset into care and maintenance for two years is an extraordinary decision.
The reason is simple. The natural diamond market is experiencing its deepest downturn in decades. Demand has weakened sharply, particularly in China, while laboratory-grown diamonds have become an increasingly attractive and much cheaper alternative. Rough diamond prices have fallen by about 50% since their 2022 peak.
Rather than allowing more diamonds to enter an already oversupplied market, De Beers has decided to shut off one of its biggest taps. The hope is that reduced supply, combined with any recovery in consumer demand, will eventually stabilise prices.
The company is not abandoning Venetia. It plans to continue investing in critical underground infrastructure while deferring active production. Since 2024, De Beers has also stripped more than US$100 million a year from its overhead cost base as part of a broader restructuring programme.
Market Snapshot
• Rand: Around R16.50 to the US dollar, reflecting continued sensitivity to global market sentiment.
• JSE All Share Index: Hovering around 110,000 points, with investors awaiting the peak corporate reporting season.
• Repo Rate: 7.00%, keeping borrowing costs elevated for businesses and consumers alike.
• Inflation: Remaining relatively subdued, although economic growth continues to be sluggish.
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