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Gem prices to increase this year - DE BEERS

Publishing Date : 23 February, 2015


DeBeers Head of Strategy and Corporate Affairs, Bruce Cliver

DE BEERS, the world’s biggest diamond producer, said there was capacity for gem prices to increase this year after an industry credit crunch led to a decline in the final quarter of last year.

According to the diamond producer, the clamminess of diamond prices in the final quarter of last year will continue into this year.

During the 2014 financial year De Beers’ underlying EBIT increased by 36% to $1.4 billion. The increase was due primarily to solid demand across key markets, particularly the US, which resulted in strong revenue growth. Operating costs benefited from favourable exchange rate movements, which offset underlying inflationary pressures.

De Beers’ total sales rose 11% to $7.1 billion, with rough diamond sales up 12% to $6.5 billion. Higher rough diamond revenue was driven principally by a 12% increase in consolidated sales volumes to 32.7 million carats. Average realised diamond prices were in line with 2013 at $198/carat, driven by 5% higher average rough price index in 2014, offset by a marginally lower product mix.

DeBeers mines in Botswana reported a stronger performance. Diamond production was up 5% to 32.6m carats, ascribed largely to the stronger performance of Debswana. Output this year is forecast at between 32-million and 36-million carats, depending on the market.

Polished prices ended the year broadly in line with where they started in 2014, with the increase in the first half of the year being offset by a reduction in the second half. Rough diamond prices increased over the course of 2014, albeit with some softness experienced towards the end of 2014 and early in 2015.

DeBeers Head of Strategy and Corporate Affairs Bruce Cliver said that the mining group will this year increase investment in new mines. After investing US$700 million the group will increase investment to US$850 million.

“Prices should recover in the second, third and fourth quarters of this year and this was almost a reverse of the trend last year when the first three quarters of the year delivered rising prices,” he said.



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