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De Beers achieves rise in production, sales in H1
DTC sale increases 84%
By: Diamond World News Service
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Jul 24 2010 5:00PM
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Reference: 5161  

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De Beers’ achieved noteworthy recovery in its production, sales and profits in the first six months ending 30 June 2010, over the same period last year. The mining major attributes this to positive consumer sentiments returning, with strong double digit growth in consumer demand from China and India and a modest improvement in the U.S. markets, indicative that the recession phase is surpassed.

EBITDA (earnings before interest, taxes, depreciation, and amortisation) in H1’10 was worth $762 million over EBITDA worth $297 in H1’09. Net earnings of $301 million compared to $3 million the year before.

Rough diamond sales at the Diamond Trading Company (DTC), increased 84 percent to US$2.6 billion; volumes also increased and prices improved on average, comparable to June 2008 pre-recession levels.

Production rose 133 percent to 15.4 million (H1 2009: 6.6 million carats). Venetia mine produced 2 million carats (2009: 0.7 million), Jwaneng mine 5.3 million carats (2009: 2.3 million) and Orapa mine 4.3 million (2009: 1.4 million). Debswana’s Cut-8, expansion project at Jwaneng mine, has commenced. Having successfully refinanced its debt, DBCM continues to look at ways to enhance its future prospects.

Production and operating costs increased to US$699 million (2009: US$479 million), due to increased production by the Group, although the Group intends maintaining focus on cash management and continuing the efficiency improvements achieved in 2009.

In March 2010, together with recapitalisation by its shareholders of US$1 billion, the Group successfully concluded refinancing all of its international and DBCM’s South African debt. Free cash flow amounted to $620m, rising from an outflow of $126m in H1’09. Global costs were reduced by 45 percent and staffing levels by 30 percent in 2009.

Nicky Oppenheimer, Chairman of De Beers Group, commented, “One year later, our results for the first half of 2010 show the success we’ve had in managing costs, creating operating efficiencies and improving our balance sheet.” The company is maintaining a cautious outlook for the months ahead, due to the fragile global economic climate especially in important diamond markets of the US, Japan and Europe. It expects a period of market stabilisation in H2.

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