De Beers Reports Rise on Year of 1M Carats in H1 to 14.3 M Carats

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home3_polished-loupeDe Beers reported half-year production increased by nearly one million carats to 14.3 million carats in the first half of 2013 from 13.4 million carats in the year-earlier period owing to improved ore grades at Orapa and Jwaneng mines in Botswana.

Total sales of $3.3 billion were unchanged from a year earlier, while rough diamond sales of $3.0 billion were also unchanged.

After a 12 percent decline in De Beers’ rough diamond prices during the second half of 2012, prices increased by 6 percent in the first six months of 2013, the miner said.

“The realised average price to June 2013 was 2 percent higher than for the same period 2012, driven by an improved product mix, more than offsetting the lower price index,” the company commented.

Looking forward, De Beers said that with full recovery from the Jwaneng slope failure and Venetia mine flooding expected during the second half of 2013, it continues to anticipate full-year production will recover to be broadly in line with 2012 subject to market conditions.

“De Beers expects moderate growth in diamond jewellery demand in the remaining six months of 2013, supported by improving sentiment in the US market and continued growth in China, albeit at a lower rate. Conditions in India and Japan remain more uncertain due, in part, to the continuing volatility of their currencies, which is expected to affect growth in US dollar terms.

“Overall, despite the fragility of the global economic recovery, macro-economic conditions are generally supportive of global growth in the polished diamond market in 2013 at levels slightly above 2012.”

De Beers said that retailer results for the early part of this year were “mixed in the key consumer markets. The USA exhibited encouraging growth. Growth in China continued though at a slower pace and was somewhat patchy. Polished prices edged up on the back of moderate retailer re-stocking, but high cutting centre stock, tight midstream liquidity and a weakening rupee continued to create challenges for the rough market.”

Meanwhile, De Beers Group CEO Philippe Mellier said: “During the first half of 2013, we saw encouraging signs of stability and moderate growth in the major diamond consumer markets of the USA and China. While polished diamond prices have increased slightly during the period, trading conditions remained challenging for our rough market partners.”

He commented that in the first half of this year, De Beers’ rough diamond prices recovered some of the losses seen in second half of 2012, with an improved product mix offsetting the lower price index. He said there had been improved grades at the miner’s two two biggest mines, Jwaneng and Orapa.

He added that the relocation of the Diamond Trading Company’s London-based sales operations to Botswana was on schedule, with the first Sight taking place in Gaborone later this year.

“Looking forward, while the market continues to experience volatility and macro-economic uncertainty, we remain cautiously optimistic that the growing strength exhibited in the polished market, particularly in the USA, will translate to overall global growth for the year. In the longer-term, the fundamentals of the industry remain strong, as growing demand will continue to outpace flat to declining production,” Mellier added.

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