De Beers Sees ‘Moderate’ Diamond Demand Growth on China, India
De Beers, the world’s biggest diamond producer, forecast a recovery in jewelery demand this year after profit tumbled 45 percent in 2012 as prices and output of the precious stones fell.
“De Beers expects moderate growth in diamond jewelery demand,” the company said today in a statement. “This will be supported primarily by a more positive picture emerging from China and India compared to 2012.”
Rough diamond prices fell 16 percent last year after three consecutive annual gains as Asian purchases were delayed because of high inventories while the euro-region debt crisis eroded consumption. De Beers said in December that prices will be buoyed in 2013 by tighter supply, while output will hold steady.
“Some upside is possible in the U.S.” this year, according to the producer, which said trading in other developed markets is likely to be “challenging.”
Anglo American Plc, owner of De Beers, said in a separate statement that underlying operating profit at the unit fell to $815 million in 2012 from $1.49 billion a year earlier. Diamond production dropped 11 percent to 27.9 million carats, about 40 percent less than its pre-crisis output in 2008.
Diamond producers have struggled to find new large mines to replace aging assets. Output at many of the biggest deposits is falling as supplies of more accessible gems near the surface are depleted. De Beers’s Orapa project in Botswana began output in 1971, while its Jwaneng diamond mine, the world’s largest by production value, and Rio Tinto Group’s Argyle started in 1982.
De Beers plans to invest $2.3 billion to build a mine beneath its Venetia open-pit operation in South Africa, it said yesterday. The company expects underground output to begin in 2021, yielding about 96 million carats during the mine’s life.
Anglo American bought the Oppenheimer family’s 40 percent in De Beers for $5.1 billion last year, increasing the company’s holding to 85 percent and ending the dynasty’s 80-year ownership. Botswana owns the rest of the business, which was formed by British colonist Cecil John Rhodes more than 120 years ago.
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