De Beers to earn profit this year

TOP diamond producer De Beers would achieve a positive interim and full-year bottom line despite slashing output by 90 per cent in the first quarter, the director of communications David Prager said at the weekend.

The diamond market, hammered by the global downturn, was slowly improving but De Beers was pushing forward a plan to slash this year’s operating and capital costs by US$1,5 billion (N$12,2 billion), said Prager.’We’ve definitely seen signs of recovery in the market, but we’re talking about first half numbers and it’s certainly no surprise that at least the first quarter of the first half was historically difficult,’ he said.’Clearly there’ll be a drop, but I don’t think it will be dramatic… maybe some people will even be surprised because it’s better than they thought.’The company will be profitable this year,’ he said.The firm, which controls about 40 per cent of the rough diamond market, expected operating costs to fall by 47 per cent this year and had cut staff numbers in London by 25 per cent to 300, Prager said.The heavy cost cutting would leave the group in a strong position for the future as recovery takes hold.Demand is stronger in China than elsewhere and interest is ramping back up in the key US market.’Obviously things aren’t back to normal and people are still cautious, but we’re certainly not in the place we were in March,’ he said.Sales of engagement and wedding rings have held up during the downturn and research has shown that people are delaying, not cancelling other diamond purchases.Prager added: ‘We expect to see in the second half a further return in demand, and then moving into 2010, more of a return to normal trading conditions. All the signs point to a progressive recovery.’De Beers sold to specially selected clients at 10 week-long sales events during the year. The last three events had shown a sharp rebound, he said.Turnover at the events from March to last month was triple that of the three months before.The increased demand may also spur a further rise in output in the second half after the group’s Debswana unit in Botswana was shut down earlier in the year, cutting first quarter output by 91 per cent.Botswana was back in production and the Namibian mines restarted this month, Prager said. -Nampa-Reuters