De Beers Declares Net Profit of $348-Million for H1

Diamond-miner De Beers on Friday 23 July 2010 reported a 134% increase in its output to 15,4-million carats in the first six months of this year.  The group highlighted that the first half of this year had seen a strong recovery against the lows of the first half of 2009, with demand for rough diamonds increasing and sales volumes and prices having improved significantly.  De Beers had produced only 6,6-million carats of diamonds during the first half of last year, as a number of mines and operations had taken a production holiday, given the effects of the global economic crisis on demand and pricing of diamonds.  CEO Gareth Penny noted that the group had seen strong price growth on the back of consumer demand, as well as restocking throughout the pipeline during the six months.  Rough diamond sales by the group’s marketing arm had improved by 84% year-
on-year to $2,6-billion, as a result of increased demand from retail markets, particularly in India and China.  Total group sales increased by 74% to $2,97-billion, compared with $1,7-billion the year before.  The increased demand had led to a corresponding increase in production, with Mr Penny noting that almost all its major mines had significantly increased output during the six months.  De Beers recorded a net profit of $348-million in the first half of the year, compared with a net loss of $6-million the year before.  Mr Penny commented that the group was proud of its financial performance for the six months, with its earnings, excluding special items, having reached their second-largest level in the last decade.  This was an “extraordinary” achievement on the back of the 2009 performance, he noted.  The results posted on Friday 23 July 2010 had exceeded thegroup’s expectations and demonstrated the effectivenessof De Beers’ strategy to produce in line with demand, while focusing on its cost management and creating efficiencies throughout the busi-ness, added Mr Penny. Mining Weekly