De Beers sees 55pc rise in first-half earnings

De Beers, 45 per cent owned by miner Anglo American , said yesterday earnings before interest, tax, depreciation and amortisation totalled $1.2bn.

The diamond miner, which controls around 40 per cent of the rough diamond market, said sales of rough diamonds by the Diamond Trading Company were up 33 per cent at $3.5bn, the highest ever sales figure recorded for the first half.

Prices for diamonds are now well above their 2008 pre-crisis levels, having been one of the best performing commodities this year. Rough diamond prices have been boosted by a dearth of new mines, low inventories at cutting centres and increasing demand.

Chief operating officer Bruce Cleaver said: “Not only have we seen continued growth in rough diamond prices, but we have seen (the strongest) growth in polished prices in the six month period in the last 30 years, which is very healthy for us.”

De Beers did not give a forecast for price growth for the second half, but said it expected prices to continue growing, with the all-important Christmas season in the US, the world’s largest jewellery market, and Indian Diwali celebrations expected to produce strong demand.

It expects US demand growth over the year to be in line with 2010 at around seven per cent, almost double previous forecasts.

Anglo American , which controls De Beers alongside the Oppenheimer family, said it would report underlying earnings of $299m for the first half from its investment in De Beers.

Numbers from De Beers add to rising earnings at other Anglo units, Kumba Iron Ore and Anglo Platinum, released on Thursday and Monday, helping to sketch a positive picture ahead of group-level results, due on Friday.

Diamonds account for roughly five per cent of Anglo’s earnings.

De Beers, which vies for the spot of the world’s largest diamond producer in carat terms with Russian state-owned miner Alrosa, said it recovered 15.5m carats over the six months, broadly in line with the previous year, despite plans to boost output.

The miner said plans to increase production were hampered by heavy rainfall in South Africa and skills shortages at the artisanal level, which delayed repairs.

Chief financial officer Stuart Brown said “We are busy addressing this and production in the second quarter and the second half of the year will be much improved.”

De Beers said its production in South Africa had not yet been affected by strikes over wage negotiations – which are currently hitting the country’s entire mining sector – thanks to the group’s advance planning and stockpiling.

But it warned of the long-term impact of damaging wage inflation above consumer price inflation.