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De Beers set to glitter and sparkle

Jun 12 2014 05:00

Johannesburg - Leading diamond producer De Beers said on Wednesday it expects global demand for polished gems to rise by up to 4.5% this year, thanks to the US market recovery and a buoyant China and India.

"The global economy is still not doing very well but we are lucky that we have a good mix of countries and that the middle class is growing, which means our industry isn't doing too badly," said chief executive Philippe Mellier in an interview with AFP.

"Demand continues to grow," he said.

"The largest global market for diamond jewellery is the United States and everyone knows they are taking off again," said Mellier.

"When stocks and real estate pick up like they're doing today after the big crisis, there's more money floating around and the Americans spend."

The second-largest diamond consumer, China, together with Hong Kong and Macau, accounts for up to 13% of global demand.

"More and more Chinese are achieving the buying power to acquire jewellery and diamonds especially when they get married," said Mellier.

De Beers also expects "good to very good" second quarter results in India, which has become "a potentially large source of diamond demand".

The country "has for a long time been a market for gold jewellery, often sold in weight, but for a few years now diamonds have been making inroads in jewellery and it works very well".

He hailed new Indian Prime Minister Narendra Modi as a "fervent defender of an industry which he knows well, the diamond industry," having been governor of Gujarat state, which is known for its diamond polishers.

Founded in 1888 in South Africa, the firm was taken over by British giant Anglo American [JSE:AGL] in 2012, which bought 40% of the shares from the Oppenheimer family to add to its extant 45% stake.

Anglo American now controls 85% of De Beers shares, while the government of Botswana retains 15%.

Last year the diamond producer reported $1bn in operating profit - more than double that of 2012.

Rough diamond prices stabilised from 2013 after post-crisis frenzied buying drove it to a peak in 2011.

The firm's production rose to 31.2 million carats last year, a 12% improvement on 2012 figures.

Because of the Anglo American buyout, De Beers will not publish separate financial reports after the 2013 financial year.

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anglo american  |  de beers  |  narendra modi  |  diamonds


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