De Beers sees diamond price rising, higher profits

JOHANNESBURG – South Africa’s De Beers, the world’s biggest diamond producer, expects prices to increase in the year ahead and earnings at its domestic unit to rise thanks to growing demand for gems and a more stable US dollar than last year.

Jonathan Oppenheimer, Managing Director of the South African unit, De Beers Consolidated Mines (DBCM), told Reuters late on Thursday that 2004 was a record year for consumer growth, but profits were curbed by a weaker US dollar. “We’ve been very encouraged by the way the global demand for diamonds has progressed, and consequently we believe that we will see small increases in price looking forward, which is something that we are very enthusiastic about,” he said.”We anticipate the rough diamond prices to be flat to slightly increasing this year…when those price increases will come is very dependent on market changing circumstances so it’s very difficult to predict.”De Beers’ marketing arm the Diamond Trading Company increased prices by 14 per cent last year and in June announced a price hike of just under three percent.Oppenheimer said De Beers was trying to improve the productivity of its employees and mines to raise margins.”We believe that we will be making slightly more money this year than we did last year in the South African operation,” he said after a visit by companies from around the world to view the HIV/AIDS efforts at De Beers’ Cullinan mine near Pretoria.”At the consumer level the principal market that is driving our business is the US, but the Far East and the Middle East, including India, have proven to be remarkably resilient fast-growing emerging markets,” Oppenheimer said.”We are very excited to be participating effectively in growth and from the continued consumer confidence.”Oppenheimer said in May that the South African unit of De Beers expected to increase production to more than 14 million carats this year from 13,7 million in 2004, and the first quarter production was ahead of forecasts.An increase for the full year was expected due to improved efficiency and yield at the domestic unit of De Beers.De Beers, which is 45 per cent owned by diversified miner Anglo American, produces nearly half of the world’s diamonds.Oppenheimer said the firm had not yet finalised a decision on the underground operations at its old Kimberley mine after a review was launched in May.The Kimberley mine is expected to incur losses of 150 million rand this year.The review at Kimberley came after DBCM said in February it might have to cut by 13,5 per cent its 9 442 jobs in South Africa since five of seven mines are operating at a loss, mainly due to a strong rand currency that cuts export income.-Nampa-Reuters”We’ve been very encouraged by the way the global demand for diamonds has progressed, and consequently we believe that we will see small increases in price looking forward, which is something that we are very enthusiastic about,” he said.”We anticipate the rough diamond prices to be flat to slightly increasing this year…when those price increases will come is very dependent on market changing circumstances so it’s very difficult to predict.”De Beers’ marketing arm the Diamond Trading Company increased prices by 14 per cent last year and in June announced a price hike of just under three percent.Oppenheimer said De Beers was trying to improve the productivity of its employees and mines to raise margins.”We believe that we will be making slightly more money this year than we did last year in the South African operation,” he said after a visit by companies from around the world to view the HIV/AIDS efforts at De Beers’ Cullinan mine near Pretoria.”At the consumer level the principal market that is driving our business is the US, but the Far East and the Middle East, including India, have proven to be remarkably resilient fast-growing emerging markets,” Oppenheimer said.”We are very excited to be participating effectively in growth and from the continued consumer confidence.”Oppenheimer said in May that the South African unit of De Beers expected to increase production to more than 14 million carats this year from 13,7 million in 2004, and the first quarter production was ahead of forecasts.An increase for the full year was expected due to improved efficiency and yield at the domestic unit of De Beers.De Beers, which is 45 per cent owned by diversified miner Anglo American, produces nearly half of the world’s diamonds.Oppenheimer said the firm had not yet finalised a decision on the underground operations at its old Kimberley mine after a review was launched in May.The Kimberley mine is expected to incur losses of 150 million rand this year.The review at Kimberley came after DBCM said in February it might have to cut by 13,5 per cent its 9 442 jobs in South Africa since five of seven mines are operating at a loss, mainly due to a strong rand currency that cuts export income.-Nampa-Reuters