De Beers targets 51 million carats

Staff Writer | Tuesday February 9, 2010 00:00

In an interview with Miningmx, David Noko, MD of De Beers Consolidated Mines (DBCM), noted that demand for diamonds had increased in January. However, he was not overly optimistic the global recession was nearing an end.

It was also unclear whether there had been a recovery in diamond demand or whether the demand was simply the result of restocking, he said. In 2009, diamond sales fell 30% owing to the global recession.

Output at DBCM was increased in October after a period of significant downscaling. Commenting on the curtailed production at DBCM, Noko said that every business had to adjust in order to survive 'and ensure sustainability', which ultimately led to growth.

De Beers is set to announce its financial results for the year to end-December this Thursday.

On the other hand, Debswana, De Beers largest contributor of rough, expects production to reach 60 percent of its normal levels in 2010, or about 20 million carats.

The company produced approximately 17.1 million carats of diamonds in 2009, or around 50 percent of its normal levels. Debswana's output was 32.3 million carats in 2008 and 33.6 million carats in 2007. Debswana, De Beers largest mining venture, closed its mines for two months at the beginning of 2009 due to the reduced demand for rough diamonds.

The company produced approximately 17.1 million carats of diamonds in 2009, around 50 percent of 'normal levels,' Esther Kanaimba, Debswana spokesperson, said in an earlier interview.

. 'We expect production to reach 60 percent of normal levels in 2010, to about 20 million carats,' she said.Kanaimba explained that the company is ready to respond to market demand and would ramp up production accordingly, but added that, based on current trends, production will only reach full capacity again in 2012.

Recently, De Beers managing director Gareth Penny said there are three forces that De Beers believe would have an impact on the diamond industry in the future.

These are the decline in supply of rough diamonds from a mining point of view; changes in demand patterns - both from the increasing demand from emerging markets like China and India, and also shifts in demographics in the mature markets like the US - and increased challenges to diamonds from both a reputational point of view and potentially alternative products.

Looking back on 2009, Penny said the diamond industry was forced to take painful and extraordinary actions in the short-term so it could enjoy long-term growth but he said the industry had risen to the challenge.

He said while the industry has been through a lot, and is by no means back to normal with the short term still uncertain but evidence that the recession has begun to give way to recovery.

'I believe that the idea of what is normal - the period that ended in mid-2008 - is now abnormal. Instead, the diamond industry is the author of the 'new normal', a more sustainable state that fully appreciates the diamond as a finite 'treasure of nature' and acts accordingly,' Penny said.