De Beers’ sales increased slightly and production rose in 2013, according to Anglo American results released on Friday.
Anglo, which has increased its stake in the diamond miner to 85 percent, said full year production increased by 12 percent to 31.2 million carats (2012: 27.9 million carats) with improvements across all regions, particularly in Botswana and Canada.
Sales increased slightly to $6.4 billion (about P57.5 billion) in 2013 (2012: $6.1 billion (about P54.8 billion) on a comparable basis). De Beers’ rough diamond price index has increased 2 percent since the start of the year, while average realised rough diamond prices were 5 percent higher, driven by the product mix.
However, India was hit by challenging economic conditions that led to weakening demand while the U.S posted positive growth.
De Beers’ operating profit totalled $1,003 million, an increase of 112 percent compared to 2012, driven by the group’s increased shareholding and a greater than 35 percent improvement in the underlying results of the business. The improvement reflected higher sales revenues and tight cost control, which benefited from favourable exchange rate movements.
“In Botswana, higher production was driven by Jwaneng’s recovery from the slope failure in June 2012, which followed completion of the remediation programme in the third quarter,” Anglo said.
“Production at Orapa was slightly higher than 2012, despite unplanned maintenance on plant No. 1, which returned to full operation in October.”
Debswana, which is owned 50/50 by Botswana government and De Beers, said recently its stability management programme has been reinforced by acquiring additional slope monitoring systems and other devices that it did not have before in response to a disaster at Jwaneng mine that claimed lives.
There was no loss of life in 2013 and improved its lost-time injury frequency rate (LTIFR) considerably from 0.32 in 2012 to 0.19 in 2013 with only 14 new cases of occupational disease were reported..
According to Anglo American, full production was restored at Venetia after the mine was impacted by very heavy flooding in the Limpopo province at the start of the year. Shortfalls in ore mined were mitigated by the processing of ore stockpiles. Production improved steadily in the third quarter, with full recovery by the fourth quarter.
“In Canada, performance at Snap Lake improved significantly, with carats recovered up approximately 50 percent as a result of a focus on throughput and mining efficiency. At Victor, carat recovery exceeded expectations and was broadly in line with the prior year.”
Anglo also revealed that Debmarine Namibia performed strongly, largely due to the contribution of the MV Mafuta following its production upgrade in early 2013. Namdeb also performed well, with carat recovery higher than in 2012.
De Beers’ brands, Forevermark saw strong growth in 2013, with door numbers up by 39 percent on 2012. This growth was driven primarily by the core markets of the US, China, Japan and India. The brand is now available at more than 1,200 retail partners in 12 markets. Since the launch of Forevermark, more than 870,000 diamonds have received the Forevermark inscription and unique identification number. The inscription is a promise that each diamond has met the brand’s high standards of quality, ethical integrity and provenance.
On the outlook, De Beers is expecting a slight strengthening in growth in diamond jewellery demand in 2014, driven by continued gradual improvements in the global economic outlook.
“The US and China are expected to continue to be the main engines of growth for polished diamonds, while most other markets are expected to show positive growth in local currency, with final dollar denominated results being partly dependent on currency fluctuations,” it said.
“Rough diamond manufacturers, in India in particular, face continued pressures regarding levels of bank financing. In India, further volatility of the rupee may potentially affect rough diamond sales. In the medium to long term, industry fundamentals are expected to strengthen as diamond production plateaus and demand continues to increase.”
