Tel Aviv - Diamond producer De Beers plans to cut costs and use
machines more in place of labour, as it strives to become leaner and more
flexible in response to a tougher global economic environment, says chief executive
De Beers' owner Anglo American has just changed its own
management and is in the middle of a three-month review, the outcome of which
will likely include steps to improve the performance of the world’s biggest
diamond producer by value.
Mellier and another senior executive, Varda Shine, told
Reuters that De Beers was working on a wide range of ideas including a new
automatic grading machine, which would “get rid of the human element” in
It also hopes to introduce a screening machine by the end of
the year that can detect synthetic stones among small, or melee, diamonds.
“We currently have a big project that is looking at
integrating the mining companies’ processes and systems together with the
midstream sorting operations all the way to sales,” said Shine in an interview.
“[We need] to make sure that we are able to become leaner
and more flexible because the world is much more volatile today.”
Both executives shied away from saying whether that would
add up to consolidation of some of the company’s businesses or worker lay-offs,
but they did note that De Beers had four separate units and said the whole
process could involve some capital outlays.
Mellier also said he could not comment on the ongoing review
Prices of diamonds slumped after the 2008 financial crash
and have still to fully recover, hurting the margins of De Beers and its main
competitor, Russia’s Alrosa.
Some players have speculated that the market might gain from
investors in markets such as China using dollar-denominated assets as a safe
haven, while the Federal Reserve reduces the flood of cheap dollars flowing
into the world economy.
A more durable recovery of the US economy may also help the
jewellery market, but against that are signs of a slowdown in demand and
economic stimulus in China, a key growth market for diamonds in recent years.
Mellier said on balance he believed global demand for
diamond jewellery would rise a touch faster this year than last year, outpacing
supplies of the precious stones and clearing the way for more investment in the
Production for De Beers, however, would stay in line with
last year’s rate of 27.9 million carats, he said.
Consumer demand for diamond jewellery rose 3% last
year, but De Beers’ total sales fell 16% to $6.1bn, while
core earnings fell 39% to $1.08bn.
De Beers forecast a single-digit rise in rough diamond
prices this year, after a 12 percent fall last year. – Reuters
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