HomeDiamonds & GemstonesDe Beers expects challenging 2009

De Beers expects challenging 2009

Rough diamonds on the
conveyor at the De
Beers Venetia diamond
recovery plant
Johannesburg, South Africa — MININGREVIEW.COM — 20 February 2009 – De Beers – the world’s top producer of rough diamonds – says its total sales for 2008 rose 1% to US$6.9 billion (R70 billion) after a sharp slowdown in demand in the last quarter of the year, while output fell 6%.

In a statement released here today, De Beers said the global economic crisis was having a negative impact on sales of retail diamond jewellery, liquidity and demand for rough diamonds, which had hurt rough diamond sales. “We expect trading conditions to remain challenging throughout 2009,” the company statement said.

It added that the De Beers marketing unit, the Diamond Trading Company (DTC), had posted record sales in the first nine months of last year, but sales had tumbled in the fourth quarter at the onset of the economic slowdown. It said production had fallen to 48.1 million carats from 51.1 million carats in 2007.

De Beers – which controls around 40% of the rough diamond market – said the drop had been seen in Botswana, Namibia and South Africa, where output had fallen sharply after it had sold its Cullinan mine and closed The Oaks mine.

“Over the first nine months, the DTC achieved record sales of natural rough diamonds as buoyant demand translated into increased prices,” De Beers said. “Fourth quarter sales slowed significantly as a result of the onset of the global economic downturn and the subsequent liquidity squeeze in the key global cutting centres.”

In order to cope with the expected slowdown in its business this year, the company said it would significantly reduce production levels, costs and capital expenditure across all its operations.

This would help it weather the tough times ahead.