De Beers expects 'moderate' growth on China and India
Bloomberg in London
De Beers, the world's biggest diamond producer, forecast a recovery in jewellery demand this year after profit tumbled 45 per cent in 2012 as prices and output of the precious stones fell.
"De Beers expects moderate growth in diamond jewellery demand," the company said in a statement yesterday. "This will be supported primarily by a more positive picture emerging from China and India compared to 2012."
Rough diamond prices fell 16 per cent last year after three consecutive annual gains as Asian purchases were delayed because of high inventories while the euro-zone 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 United States this year, according to the producer, which said trading in other developed markets is likely to be "challenging".
Anglo American, owner of De Beers, said in a separate statement that underlying operating profit fell to US$815 million in 2012 from US$1.49 billion a year earlier. Diamond production dropped 11 per cent to 27.9 million carats, about 40 per cent less than its pre-crisis output in 2008.
Diamond producers have struggled to find new large mines to replace ageing 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 US$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.
London-based Anglo American bought the Oppenheimer family's 40 per cent in De Beers for US$5.1 billion last year, increasing the company's holding to 85 per cent 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.