NEWS 2005


De Beers revenue surges 14% on US, China and India sales

September 30, 2005

By Stewart Bailey and Antony Sguazzin

Johannesburg - De Beers, the world's biggest diamond company, said revenue from the first seven of 10 annual sales surged 14 percent to the highest in a decade as consumers in the US, India and China bought more jewellery.

Earnings were $4.77 billion (R30.34 billion) compared with $4.18 billion last year, Varda Shine, De Beers' sales director, said yesterday. The eighth sale, known as a sight, would be "very healthy", she added.

Prices in the $8.2 billion market for uncut, unpolished diamonds had jumped more than a third since 2003 as discoveries failed to keep pace with demand, according to US consulting company Rapaport Research.

Rising jewellery sales in China, where eight out of 10 grooms buy their brides diamond rings, are adding to demand in traditional markets such as the US. De Beers has raised prices twice this year.

Diamond sales rose 8 percent to $3.2 billion in the first half of this year and would at least match those in the second six months, De Beers said on July 25.

That target remains intact, even as oil prices, which reached a record of $70.85 a barrel on August 31 in New York, cut disposable income among some customers.

Sales of diamond jewellery at the "lower end of the market", like at Wal-Mart Stores, the world's largest retailer, might be affected by the higher fuel prices, Shine said. The high end of the market would be unaffected.

Gareth Penny, who takes over from De Beers managing director Gary Ralfe next year, will lead the effort to boost demand for rough diamonds bought by jewellers by 5 percent each year until 2009.

He would increase production from its mines by as much as 17 percent to 55 million carats by 2010, he said.

The company would focus on exploring for new diamond deposits in Angola, the Democratic Republic of Congo, Russia and Botswana, Penny said. It has mines in South Africa, Botswana, Tanzania and Namibia, and is digging a new one in Canada.

Anglo American owns 45 percent of De Beers. The Oppenheimers own 40 percent and the Botswana government 15 percent.

- Bloomberg -