Cape Town, South Africa — MININGREVIEW.COM — 11 February 2009 – De Beers Group – which is the largest diamond mining company in the world – is of the opinion that, with future demand growth in emerging markets, diamond demand is likely to outpace what is forecast to be lower levels of diamond supply significantly for many years to come.
Addressing the Mining Indaba here, De Beers executive director Stephen Lussier explained that, while the economic crisis presented challenges for the luxury goods category as a whole, diamonds were uniquely positioned to withstand and emerge from the short-term uncertainty. He pointed out that short-term reduction in diamond inventories and sales, coupled with a significantly lower level of investment in exploration and new mining projects, was likely to create a shortfall in previously forecast levels of diamond supply in the medium-term.
“De Beers has reshaped the business, seeking cost and capital efficiencies and driving profitability. We have taken tough decisions in the good times, helping us to prepare our portfolio for less favourable trading conditions” he said. “So we will reduce production significantly in accordance with DTC client demand, and will continue to substantially reduce capital expenditure and off-mine costs,” he added.
Lussier then went on to say that, while the economic crisis presented challenges for the luxury goods category as a whole, diamonds were uniquely positioned to withstand and emerge from the short-term uncertainty.
“We know from research conducted in the US late last year that, in uncertain times, consumers gravitate towards quality; they buy fewer, but better things that hold their value over time,” he said. “Recent research from China indicates that Chinese consumers also believe that diamonds will retain their value, and that they are seen as a better investment than cash, real estate, stocks or platinum,” he added.
“De Beers is fortunate to have a foundation built over 120 years that enables us to draw on our past, and take bold action in the present, with a view to securing a bright future,” Lussier concluded.