Sales at diamond-mining giant De Beers fell 7% in the first half of 2007 on the back of reduced supply of gems to its trading arm while underlying earnings rose 5%, the group announced on Friday.
Its total sales fell to $3,4 billion from $3,66-billion in the first six months of the year over the same period in 2006, while underlying earnings grew to $324-million from $308-million, interim results showed.
The fall-off in sales was due to a shortage in supply of gems to De Beers’s Diamond Trading Company in advance of new production coming on stream, as well as to a price correction in the rough-diamond market in the second half of 2006, the company’s directors said in a statement.
At the retail level, De Beers reported strong sales growth of 39% through its De Beers Diamond Jewellers global chain of stores, a joint venture with French luxury goods manufacturer LVMH.
Consumer demand for jewellery remained healthy, De Beers said, pointing to a slackening of demand at the lower price end of the United States market contrasted with ”robust” growth in China and India.
Production in the first half of 2007 increased 2% to 25,3-million carats from 24,7-million carats in the same period last year.
De Beers detailed four major new mining projects expected to ramp up production in the coming years — two in Canada and two in South Africa.
The Snap Lake mine in Canada is expected to begin production by the end of the third quarter of 2007.
De Beers produces about 40% of the world’s supply of rough diamonds from mines in South Africa, Botswana, Namibia and Tanzania.
De Beers director Jonathan Oppenheimer recently raised government hackles in South Africa by calling for subsidies to offset the costs of establishing a local diamond beneficiation industry.
Beneficiation relates to the cutting and polishing of stones.
De Beers on Friday, however, declared itself ”fully committed” to its beneficiation agreements with its government partners in Botswana, Namibia and South Africa.
De Beers is 40% controlled by the Oppenheimer family. — Sapa-dpa