HomeDiamonds & GemstonesDe Beers sales and profits up

De Beers sales and profits up

The diamond recovery
plant at De Beers’
Venetia mine
Johannesburg, South Africa — MININGREVIEW.COM — 24 July 2008 – The De Beers Group – the largest diamond mining company in the world – increased sales by 10% and profits by 17% in the first half of 2008, but remains cautious about likely figures for the full year.

Releasing these figures in its interim 2008 results here, the company pointed out that sales of smaller lower-quality gems in the American market were likely to be pretty flat in the second half of the year.

“Demand growth in China, India and the Middle East is countering lower gem sales in the U.S., which accounts for about half of the world’s diamond retail market,” the results statement said. “While diamond prices gained about 8% in the first half and a further 5% this month, the squeeze on U.S. consumers undermines the potential for additional increases.”

"Clearly in the current economic climate that surrounds all of us, it would be imprudent not to be cautious about the second half of 2008," managing director Gareth Penny said,  adding that more price hikes in the second half were uncertain.

Rough diamond sales climbed to US$3.3 billion (R26.4 billion) in the first half from US$2.99 billion (R24 billion) a year earlier, the De Beers statement said.

De Beers production will probably drop to about 50 million carats this year from 51.1 million in 2007, after first-half output fell 4.1% to 24.2 million carats because of the power shortage in South Africa.

Total sales in the first half – including the company’s artificial gem unit – rose 10% to US$3.74 billion (almost R30 billion), and gross profits were up 17% at US$773 million (R6.2 billion).

Bloomberg News reports that De Beers is selling unprofitable mines in South Africa and expanding in Canada and Botswana, The Debswana venture with the government of Botswana accounts for two- thirds of total output.

The company intends raising production to keep pace with growing demand from increasingly wealthy Chinese and Indian consumers. Output at Snap Lake in Canada started in the fourth quarter of last year while operations at the Victor mine in the country is scheduled to begin later this year. The two mines are expected to produce a combined 2.2 million carats a year.