Johannesburg - Diamond producer De Beers posted a $220m underlying loss
after facing what it called "challenging trading conditions" in
Releasing its results for the year ended December 31 2009 on
Thursday, the company - 45% owned by Anglo-American -
announced a $1bn rights issue.
"Shareholders have shown strong support by agreeing to subscribe
for additional equity capital of $1bn in proportion to their
existing equity holdings, which will enable a reduction in overall
debt and strengthen the De Beers Group balance sheet," the company
said in a statement.
The company said banks had also given credit approval for the
refinancing of a 1.5bn facility after months of
It said 2009 had presented some of the most challenging trading
conditions the diamond industry had ever experienced.
However, De Beers said demand for rough diamonds had much
improved at the first sight of the year and it expected this to
continue at the upcoming February sight.
A sight is the term used by the diamond industry to refer to the
occasion when a company such as De Beers Diamond Trading Company
offers uncut diamonds rough for sale to a specific list of diamond
"De Beers will continue to take a cautious and prudent approach
to production and sales levels for 2010," it said.
Consumer demand for diamond jewellery was beginning to recover,
driven in part by the strength of the developing markets of China
"However, with the fragility of the world economy and perceived
weakness of the global recovery post recession, the company would
only expect a gradual increase in production levels, sales and
De Beers said the desire for diamonds remained strong and, given
the improvement of industry fundamentals, its directors were
cautiously optimistic about medium-term prospects.
"In the longer-term, the fundamental supply-demand dynamics of
diamonds remain highly attractive.
"Future demand growth for diamond jewellery, driven by the
emerging markets of China and India, is expected to outpace what is
forecast to be lower levels of diamond supply for many years to
come, providing a sound foundation for future profitability," the