De Beers ramps up diamond sales

By Thomas Biesheuvel, Yuliya Fedorinova

De Beers' contribution to Anglo's profit almost halved in 2015 as underlying earnings fell, sales dropped by 34 per cent. Photo / iStock
De Beers' contribution to Anglo's profit almost halved in 2015 as underlying earnings fell, sales dropped by 34 per cent. Photo / iStock

De Beers is ramping up diamond sales to cash in on a recovery from last year's slump.

The company last week sold $610 million of uncut stones at its second auction of the year, 12 percent more than a January offering that was already bigger than expected.

"Rough-diamond demand continues to show signs of improvement as excess inventory has continued to work through the system in recent months," Philippe Mellier, chief executive officer of the Anglo American Plc unit, said in a statement.

"However, we remain mindful of the need for a cautious approach as the recovery continues."

READ MORE:
Man-made diamonds De Beers will never sell
Miners renew efforts to ensure millennials love diamonds

De Beers and Russia's Alrosa PJSC, which control almost two-thirds of the market, sold more than $1 billion of diamonds in January, exceeding market expectations and sparking concerns that the sales may have been too much, too soon.

Mining companies cut about a quarter of global supply last year to arrest the 18 percent slump in rough-diamond prices brought on by China's economic slowdown and an industrywide credit crunch.

Alrosa sold about $780 million of rough diamonds in its first two sales of the year, with the amount sold about the same in January and February, according to two people familiar with the transactions. The company hasn't cut prices so far this year, unlike De Beers, which lowered them as much as 7 percent in January.

China's economy continues to show signs of a deepening malaise, with the latest spate of indicators this week showing weakness in services and manufacturing.

Anglo has put De Beers at the center of its turnaround program. The London-based parent, which last month reported a fourth year of losses, is speeding up plans to pull out of coal and iron ore and build its slimmed down future around diamonds, copper and platinum.

De Beers' contribution to Anglo's profit almost halved in 2015 as underlying earnings fell. Sales dropped by 34 percent as prices declined and De Beers cut supply.

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2016, NZME. Publishing Limited

Assembled by: (static) on production apcf05 at 08 Dec 2016 23:38:38 Processing Time: 858ms