Christmas diamond sales beat expectations, says Oppenheimer
January 30, 2006
By Ben Hirschler
Davos - Retail demand for diamonds appeared to have held up well over the peak Christmas period, with sales slightly ahead of expectations, according to De Beers, the world's biggest producer of the gemstones.
"We've got no reliable hard data yet but the indicative data that we've seen is good," Jonathan Oppenheimer, the head of the South African unit of De Beers Consolidated Mines, said last week.
"If there's 'bad', 'mediocre', 'expected', 'good' and 'brilliant', it is in the 'good' range. I think we did a little bit better than we expected," he said on the sidelines of the World Economic Forum in Davos.
Half the world's diamonds are sold during the three months running up to Christmas, making demand in this period critical for De Beers, which is 45 percent owned by Anglo American.
Earlier this month De Beers left its prices for rough diamonds unchanged at the first sale, or sight, of 2006. But Oppenheimer said interest had been keen, suggesting stocks of uncut stones held by polishers may have been run down.
"The first sight has been strong and the nature of that strong sight is, anecdotally, that the larder is pretty empty," Oppenheimer said. De Beers is in the midst of restructuring loss-making mines in South Africa but Oppenheimer said the company would, at the same time, develop new projects.
The board has now approved the R1 billion reopening of the Voorspoed mine, which was shut in 1914, and work may get under in the first half of 2006, pending receipt of a mining licence.
A second, similar-sized project involving mining diamonds off the coast in sea beds is still awaiting board approval, but Oppenheimer said there was no reason why it should not go ahead. In the longer term, new diamond mines elsewhere in Africa are also a strong possibility.
"We might have something in Botswana, we might have something in Angola, we might have something in the Democratic Republic of Congo. We've got some really exciting prospecting results from all three," he said.
De Beers already has diamond mining projects in Botswana but not in Angola or the Democratic Republic of Congo. The corporation agreed in November to sell 26 percent of its South African unit to a new black-owned firm for about R3.8 billion.
The deal has yet to close but Oppenheimer said discussions over the financing were progressing well, with banks undertaking due diligence.
- Reuters
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