De Beers pro­vides good news for its share­hold­ers

The Star Early Edition - - COMPANIES - Ka­belo Khu­malo

DE BEERS, the world’s largest di­a­mond pro­ducer by value, yes­ter­day said that it had raked in $572 mil­lion (R7.5 bil­lion) in rough di­a­monds sales in the sixth sales cy­cle for this year, buoyed by a surge in de­mand that was sup­ported by this year tim­ing of the Di­wali fes­tiv­i­ties. The sales rose from the $541m of di­a­monds sold in the fifth sales cy­cle.

The in­crease in di­a­mond sales is a sec­ond set of good news for An­glo-Amer­i­can share­hold­ers, which owns De Beers in a space of two weeks. The com­pany took mar­kets by sur­prise last week when it said it was re­sum­ing div­i­dend pay­ments six months ear­lier than ex­pected on the back of lower net debt and healthy cash flow. An­glo also said it was con­sid­er­ing ex­pand­ing its ex­ist­ing as­sets, a sprawl­ing collection of mines pro­duc­ing ev­ery­thing from di­a­monds to cop­per across the world.

Bruce Cleaver, the chief ex­ec­u­tive of De Beers, said the sixth sales cy­cle of the year main­tained the trend of con­sis­tently good de­mand for rough di­a­monds across the prod­uct range. “With Di­wali being ear­lier than nor­mal in 2017, we saw some de­mand from In­dian dia­man­taires pulled forward from Sight 7,” Cleaver said. “This was due to these cus­tomers need­ing to make rough di­a­mond pur­chases in suf­fi­cient time to com­plete their pol­ish­ing be­fore the hol­i­day be­gins.” De Beers has taken a bullish pos­ture this year as global com­mod­ity prices came to life after a dif­fi­cult 2016.

Ac­cord­ing to Rough Di­a­monds In­dex, mined di­a­mond pro­duc­tion in 2017 is es­ti­mated to be 142.3 mil­lion carats worth $15.6bn which would be an 11.5 per­cent in­crease in carat vol­ume pro­duced over 2016 and a 9.9 per­cent in­crease in to­tal value pro­duced. De Beers’ Jwa­neng mine in Botswana is ranked num­ber one, and is es­ti­mated to in­de­pen­dently pro­duce 15 per­cent of the world’s di­a­monds in value.

Ear­lier this week the com­pany said its busi­ness in Botswana was on track to pro­duce the most since 2014, ex­ceed­ing its ini­tial an­nual pro­duc­tion fore­cast. It said Deb­swana, as the Botswana op­er­a­tion is known, was ex­pected to pro­duce 22 mil­lion carats this year, ex­ceed­ing its ini­tial 20.5 mil­lion-carat tar­get.

The com­pany was forced to cut rough di­a­mond prices last year after cut­ting back heav­ily on sales vol­umes dur­ing 2015 in re­sponse to the poor state of the rough di­a­mond mar­ket. De Beers said that it sold $6.1bn worth of rough di­a­monds last year, up 30 per­cent on the 2015 level of $4.7bn. At the start of the year, the com­pany said it fore­casts its pro­duc­tion for 2017 to range be­tween 31 mil­lion and 33 mil­lion carats.

It said the range would take pro­duc­tion back to nor­malised lev­els seen over the last few years. The com­pany said the first half of this year was marked by a resur­gence in de­mand for lower-qual­ity rough that was severely im­pacted after the In­dian gov­ern­ment de­mon­e­tised its high­est de­nom­i­na­tion bank notes last Novem­ber.

$572m De Beers rough di­a­mond sales in its sixth cy­cle for this year


De Beers said its busi­ness in Botswana was on track to pro­duce the most di­a­monds since 2014, ex­ceed­ing its fore­cast.

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