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Anglo American subsidiary De Beers will halt production at Venetia, its only South African mine, for the next two years in an effort to cut costs, as lab-grown diamonds continue to drive down prices.De Beers spokesperson Jackie Mapiloko told Business Day the group had begun section 189 retrenchment consultation processes on Monday. The number of jobs that will be affected has not yet been determined.The move could add to anxiety about Anglo American’s ability to sell the struggling diamond business, a process that has become the single biggest hurdle looming over the company’s restructuring ambitions and its upcoming merger with Teck Resources. Venetia, located in Limpopo, is De Beers’ only mine in South Africa, employing about 3,500 people and accounting for about a tenth of the company’s production.The mine is South Africa’s largest diamond producer by value, contributing 40% of the country’s total diamond production.In a statement on Monday, De Beers said rough diamond trading conditions were “expected to remain challenging in the near term due to cyclical and industry-specific factors”, leading to a decision to reduce costs and focus on high-priority investments.The two-year hiatus will allow the group to focus its spending on critical infrastructure involved in the mine’s $2.3bn underground expansion, which has been ongoing since 2015.De Beers said it planned to rephase capital expenditure on the underground project, including “critical infrastructure investment to enhance the capacity and efficiency of the mine, with the intention to support future production growth as business and industry conditions improve”.“De Beers is engaging with stakeholders in accordance with relevant requirements and the company’s values as it moves through this process and will both support impacted employees and continue to invest in its community and social and labour plan commitments.”A few diamond producers have mothballed their mines this year as the popularity of artificial stones continues to weigh on demand and prices.Russia’s state-backed giant Alrosa, the world’s biggest producer by volume, announced plans to cut production by 15% in May by halting production at some of its less profitable mines.The closure of Venetia comes just five months after De Beers paused the Tuzo Phase 3 expansion project at its Gahcho Kué mine in Canada, citing prolonged weakness in diamond markets.Since 2024, the group has removed more than $100m in annual overhead costs by reducing costs and divesting non-core assets.Synthetic diamonds, originally developed for industrial uses, have surged in popularity since the turn of the century as technological advancements allowed for purer stones.Their price discount compared to natural diamonds and lower environmental impact make them an attractive alternative for ring-buyers. Meanwhile, declining marriage rates in the US and China, two big markets, have added to the demand pressure.As synthetics continue to gain market share, De Beers’ estimated value has plunged from $12.75bn in 2011 to just $2.3bn this year. Parent company Anglo has written down the brand’s value three times in the past three and a half years.De Beers CEO Al Cook said the company planned to make a “number of changes to ensure greater business resilience in the near term while supporting long-term value creation.“We recognise the protracted challenging conditions as the diamond industry evolves, though we are encouraged by signs of consumer demand growth in the US and beyond, particularly in higher-quality diamonds.Cook hopes that the decline in global diamond supply will bring more support to the challenging market, saying: “The changes we are making are focused on underpinning our efficiency now and into the future, favourably positioning De Beers in its leadership role.”Shares in Anglo American were little changed on Monday at R787. They have gained about 15% so far this year.
