Diamonds are De Beers’ best friend again

It posted net earnings after one-off items of $598m, compared with a net loss of $220m in 2009, after recovering a better-than-anticipated 33 million carats as average diamond prices rose 27 per cent.

De Beers had targeted production of about 30 million to 31 million carats for 2010.

“The price of rough diamonds has recovered strongly as confidence returned to most parts of the diamond pipeline,” the company said.

“Notwithstanding this, the industry is not back to pre-recessionary levels in terms of production or sales and a high degree of global uncertainty remains.”

De Beers said yesterday it plans to increase production to 38 million carats this year and approach full production of around 40 million in 2012.

De Beers is 45 per cent owned by mining group Anglo American, 40 per cent by South Africa’s Oppenheimer family and 15 per cent by the Botswana government.

Anglo American, which is due to report its full-year earnings on February 18, said it will post underlying earnings of $302m for the year from its investment in De Beers.

Credit Suisse, the investment bank, said the contribution was slightly ahead of its forecast of $296m.

“While the directors remain cautious about the diamond market in 2011, continued positive growth is expected, albeit at a lower rate,” De Beers said.

“After a better than expected Christmas retail season, the US market is expected to continue its recovery and the exceptional growth seen in China and India is expected to be sustained,” it added.

The United States is the world’s biggest market for diamond jewellery with about 40 per cent of the world total, while China and India are the fastest growing countries in terms of diamond jewellery consumption.