De Beers meets market expectations

JOHANNESBURG – The world’s top diamond producer, De Beers, met market expectations with a 15 per cent increase in rough diamond sales for 2005 on Friday to US$6,539 billion, but failed to meet its output forecast for the year.

De Beers said in a statement its contribution to the headline earnings of mining giant Anglo American, which holds a 45 per cent stake in the diamond group, was US$430 million, which was slightly less than analysts had forecast. The diamond group, which controls about half the world’s diamond supply, also said the outlook for 2006 was positive, with market growth seen similar to 2005.”It’s a good set of results in that sales and earnings contributions came in line,” a Johannesburg-based analyst said.Group production for the year, inclusive of joint ventures in Namibia and Botswana, was 49 million carats, an increase of four per cent over 2004.That was a new record for the group, but still below the 7-8 per cent output growth it had estimated last year.”There was over-optimism on the part of De Beers with the 7-8 per cent forecast,” De Beers’ outgoing Managing Director, Gary Ralfe, who gave the output forecast last July at an interim results presentation, told a conference call on Friday.”The main reason for not meeting this (forecast) was that the Debswana mine has reached maturity, while our operation in Namibia was below last year’s output and below target.”Debswana mines De Beers’ diamonds in Botswana in a 50-50 joint venture between De Beers and that country’s government.Ralfe said the foaur per cent growth in output last year was still ahead of De Beers’ budget and therefore satisfactory.Incoming Managing Director for the diamond group, Gareth Penny, said he expected 2006 output to match the previous year’s.Penny said the group had set aside US$100 million this year to hunt for new diamond deposits globally.He said De Beers had no plans to hike prices but rather hoped sustainable price rises would come from an anticipated 6-7 per cent growth in retail sales of diamond jewellery for 2006.In 2005, De Beers’ London-based Diamond Trading Co.(DTC) raised its rough diamond prices on two occasions, the cumulative effect of which was that sales by the DTC in 2005 were at prices on average 9,5 per cent higher than in 2004.”Demand for rough diamonds continues to be steady…the 2006 outlook remains positive, with market growth expected to be similar to 2005 in line with expectations for global economic growth,” the group said in a statement.India and China were seen doing better in terms of growing demand, compared to the US and Japan, he said.-Nampa-ReutersThe diamond group, which controls about half the world’s diamond supply, also said the outlook for 2006 was positive, with market growth seen similar to 2005.”It’s a good set of results in that sales and earnings contributions came in line,” a Johannesburg-based analyst said.Group production for the year, inclusive of joint ventures in Namibia and Botswana, was 49 million carats, an increase of four per cent over 2004.That was a new record for the group, but still below the 7-8 per cent output growth it had estimated last year.”There was over-optimism on the part of De Beers with the 7-8 per cent forecast,” De Beers’ outgoing Managing Director, Gary Ralfe, who gave the output forecast last July at an interim results presentation, told a conference call on Friday.”The main reason for not meeting this (forecast) was that the Debswana mine has reached maturity, while our operation in Namibia was below last year’s output and below target.”Debswana mines De Beers’ diamonds in Botswana in a 50-50 joint venture between De Beers and that country’s government.Ralfe said the foaur per cent growth in output last year was still ahead of De Beers’ budget and therefore satisfactory.Incoming Managing Director for the diamond group, Gareth Penny, said he expected 2006 output to match the previous year’s.Penny said the group had set aside US$100 million this year to hunt for new diamond deposits globally.He said De Beers had no plans to hike prices but rather hoped sustainable price rises would come from an anticipated 6-7 per cent growth in retail sales of diamond jewellery for 2006.In 2005, De Beers’ London-based Diamond Trading Co.(DTC) raised its rough diamond prices on two occasions, the cumulative effect of which was that sales by the DTC in 2005 were at prices on average 9,5 per cent higher than in 2004.”Demand for rough diamonds continues to be steady…the 2006 outlook remains positive, with market growth expected to be similar to 2005 in line with expectations for global economic growth,” the group said in a statement.India and China were seen doing better in terms of growing demand, compared to the US and Japan, he said.-Nampa-Reuters