De Beers held its biggest sale so far this year in August as diamond prices improved, RBC Capital Markets said, citing cutters and polishers it didn’t identify, Bloomberg reported.

De Beers probably sold diamonds worth as much as $475 million at its seventh sale, analyst Des Kilalea said in a note to clients dated yesterday.

That brings sales at the Diamond Trading Co., De Beers’ trading arm, to about $2.2 billion this year, the lowest “in more than 20 years,” he wrote.

De Beers spokeswoman Lynette Gould couldn’t immediately comment when Bloomberg News contacted her by phone in London.

De Beers expects demand to improve in the second half, it said on July 24, according to the report. The company, which is 45% owned by Anglo American Plc, slashed output as first half sales dropped 57% to $1.4 billion, it said.

Recession cut demand in the US, which accounts for about half of global diamond retail sales. Prices have increased about 6.8% during the past three months, according to an index compiled by PolishedPrices, the report said.

“Resilient” prices could “reflect the need of the cutting and polishing factories to ensure they have sufficient stock for the Indian festival of Diwali and the important Christmas season in the world’s largest market, the US,” Kilalea said in the note.

RBC is forecasting DTC’s sales at $2.8 billion to $3 billion this year.

Source: www.polishedprices.com

The world’s largest diamond producer, De Beers, has reported a 99-percent drop in net profits for the first half of 2009 to just $3 million after demand for luxury goods was hard hit by the global recession.

The diamond giant, which has a 50/50 partnership with Government in Debswana, made $316 million in the same period a year ago before the economic downturn deterred even the wealthy from splashing out on non-essentials.

De Beers blamed an “extraordinarily difficult” trading environment for the slump in profitability. Sales of rough diamonds by DTC (including joint ventures like DTC Botswana) were down by 57 percent to $1.4 billion with production slashed by 73 percent to 6.6million carats.

“The industry has been severely impacted by the global economic environment being the most difficult in decades,” said the company, which temporarily halted production at its Botswana mines until last April and has cut its global workforce by 23 percent.

De Beers posted a second quarter profit of $189 million on sales of $1.3 billion after a first quarter loss of $186 million on sales of just $400 million.

The giant diamond miner, which generally reports only year-end and half-year results, said it was presenting the quarterly sales and earnings to show how its performance has improved.

The poor figures add to growing evidence that the luxury goods sector has been hard hit by the global financial crisis that tightened its noose on developed economies in the second half of last year.

Earlier this year, De Beers temporarily ceased production at many of its mines, resulting in a 73-percent drop in first half output. It anticipates that output this year will be half of last year’s 48.1 million carats.

But the company struck a somewhat optimistic note on outlook, saying “industry sentiment improved significantly” in the second quarter of this year with the price of rough diamonds beginning to rise again. While diamond demand is still subdued in the US, there is stronger interest in emerging markets such as China and India.

“The price of rough diamonds has begun to trend upwards,” it said. “These translate into improving sales trends for the DTC.”

De Beers pointed out that no major new diamond deposits have been discovered in over a decade, suggesting that demand will increasingly outpace supply.

“Looking to the medium term, diamonds have historically performed well in periods following recessions, with significant price growth seen in almost every recovery period dating back to before the 1970s,” the company said.

But it also admitted that few of the jobs it has eliminated in the downturn will be recreated even if the market rises again.

De Beers produces and markets 40 percent of the world’s rough diamonds by value, extracting them from 14 mines in Botswana, South Africa, Namibia and Canada.

It sells the diamonds to 78 sightholders, which are primarily diamond-cutting and polishing companies.

In Botswana, there are 16 sightholders who get their supply from DTC Botswana. Recently, the sightholders have suffered from a pullback in lending by banks and a sharp downturn in demand.

Despite the recent plunge in its sale of rough stones, De Beers estimates retail sales of diamond jewellery globally are down just 5 percent to 10 percent overall.

Source: allafrica.com

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De Beers, the world’s largest diamond producer, said sales are climbing this year and mines in Botswana probably will resume production next week.

“Sales have been steadily increasing since the end of last year,” spokeswoman Lynette Gould said in an e-mailed statement dated yesterday. Cash flow was positive in March, and the Johannesburg-based company is “optimistic” about meeting annual goals, she said.

De Beers suspended mining in February at a joint venture in Botswana that produces a fifth of global diamond supply and said it would borrow $500 million from shareholders. The worst recession since World War II has sapped demand for jewelry, spurring Rio Tinto Group and other mining companies to reduce production and payrolls.

The Debswana venture, which is 50 percent controlled by Botswana’s government, expects to resume production at its Jwaneng, Orapa and Letlhakane mines on April 15, Gould said. The venture produced 32.3 million carats in 2008.

Diamond prices fell 7 percent in the first quarter after slumping 9.2 percent in 2008, according to a PolishedPrices.com index. Tiffany & Co., the world’s second-largest luxury-jewelry retailer, reported a 76 percent plunge in fourth-quarter profit last month after holiday sales shrank in the U.S. recession.

Source: www.bloomberg.com

According to a New York Times report, even De Beers, which managed to maintain the high prices of diamond jewelry by restricting its supply, is feeling the economic crunch. Last year. The powerful diamond supply asked its workers in Botswana to have an extended Christmas vacation. This only means that there is more supply than demand, which would in turn cause the prices of diamonds to decrease.

The situation may look bad at this, looking at the dry facts. In the United States, the retail sales for diamond jewelry dropped to around 20 percent last year. The United States holds around half of the world's diamond demand.

This is definitely a complete turnabout from the previous stature of the diamond industry. The price of and the demand for diamonds did not experience any drastic downturn for more than 20 years. Experts say that the demand for diamonds in major countries in Asia have not yet experienced any significant decline, although this is predicted to change after the recession begins to take its claw out in the said region.

However, experts say that this can be a good time for buyers to take advantage of the situation. Buying diamond engagement rings or any type of diamond jewelry will be easier at this point, experts say, due to the decreased in the price. Owners of diamond pieces should not let go of their diamond pieces just yet, even with the fear of constant decrease in prices.

Experts say that once the economy stabilizes, the demand for diamonds may return to normal, hence changing the price of diamond pieces yet again. Meanwhile, those looking at diamonds as an investment should considering buying diamonds now, especially if they have the means and they do not plan to part of their pieces in the near future. The New York Times reports that while the industry is definitely suffering now, its long-term fundamentals are very good, which means consumers have no reason to worry.