London, England — MININGREVIEW.COM — 09 April 2009 – The De Beers Group – the world’s top diamond producer – is confident that it will be profitable in 2009 even if its turnover halves, its finance director said in an interview published in the Financial Times today.
“Trading conditions are tough,” Stuart Brown told the newspaper, “but because we saw it early and took very dramatic steps around the business, we are in a position to weather trade in 2009 and 2010 without any recourse to shareholder funds.”
“Our plan for 2009 sees us remaining profitable and cash neutral, as well as meeting covenants on our loans, even if overall turnover drops by 50%,” Brown added.
He disputed an estimate from Barclays Capital that the firm had lost US$100 million (R960 million) per month in the first quarter of 2009, in the wake of a sharp fall in diamond prices over the past year.
Brown said De Beers had been modestly cash-positive in March, and although cash-negative in February, it had not been anywhere close to the estimate cited," the paper reported.
He went on to say that the company – which is 45% owned by mining group Anglo American – would cut production to save US$1.5 billion (R14.4 billion) in operating costs this year.
Last week De Beers announced it had stopped diamond exploration in the Democratic Republic of Congo because of financial pressure from the global economic downturn. It has also temporarily closed is mines in Botswana and Namibia.