De beers produces 7m carats first quarter

| Monday April 26, 2010 00:00

The diamond giant mined 7.012 million carats during the first three months of the year, compared with only 1.082 million in the same period of 2009, according to a report by Anglo American, which owns 45 percent of De Beers.

'Production is significantly ahead of [first quarter] 2009, during which production was scaled back across all mines in response to weak market sentiment,' Anglo American stated in its production report for the period.  De Beers production still fell 40 percent below the 11.774 million carats that the company mined in the first quarter of 2008.

Anglo American noted that De Beers first-quarter sales totalled nearly three times more than in the first quarter of 2009. Rapaport News estimates show that De Beers sold around $1.5 billion worth of rough in the first three months of 2010, compared with the $529 million reported by the company for 2009.

The rise in sales followed the restocking of its pipeline, improving U.S. consumer confidence and continuing strong growth in China and India, Anglo American explained.  In March, De Beers shareholders, Anglo, the Oppenheimer family, which owns 40 percent of De Beers, and the Botswana government, which holds 15 percent, agreed to proportionally invest $1 billion to boost De Beers balance sheet. This enabled the company to renew a $1.5 billion credit facility that expired at the end of March. Since then, rumours have strengthened that Anglo is considering divesting from its diamond unit through a public listing. 'The balance sheet is in a state of disrepair. Anglo American would probably like to distance itself from this underperformer,' Chris Gilmour, an analyst from Absa Investments, was quoted as saying by South Africa's The Star. In the same report, De Beers' spokesperson Tom Tweedy dismissed the rumours as speculation. 

De Beers has said that it is focused on the recovery as it works to boost cash flows and reduce its debt. In this light, the company informed sightholders that it has extended their supplier of choice (SoC) contracts an extra year to March 31, 2011.

The first of the new ten-sight cycle begins next week in London.-(Diamonds.net)