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Better-quality diamonds still in demand in subprime-hit US, says OppenheimerFOCUSING ON THE CHALLENGES From left De Beers chairperson Nicky Oppenheimer, De Beers MD Gareth Penny and De Beers finance director Stuart Brown By: Martin Creamer Published: 15 Feb 08 found at miningweekly.co.za
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DE BEERS Demand for better-quality diamonds is continuing in the subprime-impacted US, says De Beers chairperson Nicky Oppenheimer on the impact of the US subprime crisis on diamond sales in the important US market. But, because of the “disproportionate” volume of “lower-quality,
cheaper diamonds” sold there, the subprime crisis is “obviously a worry”,
Oppenheimer says in an exclusive Mining Weekly interview. “The balance is the better-quality diamonds which seem to be remaining in demand and that’s obviously helped by the very strong growing demand in Asia,” he adds. On the impact of volatile local and global currencies on De Beers,
Oppenheimer makes the point that currency volatility is invariably an issue: “The
great volatility we see is always damaging to business. “The dramatic
strengthening of the Canadian dollar has had a great impact on our business
there”, but, conversely, the weakening of the South African rand has assisted
De Beers Consolidated Mines (DBCM), which sells the diamonds it produces in US
dollars. De Beers’ net interest-bearing debt has grown by $1,1-billion to more than $4-billion, mainly owing to investment in new projects that are scheduled to begin producing this year, which prompted shareholders to reinvest the final dividend of $100-million back into the company. On the plus side, De Beers expects to produce 24,6-million carats at Snap Lake, in Canada, in the next 20 years, and 6,2-million carats at Victor, also in Canada, in the next 12 years. DBCM MD David Noko tells Mining Weekly that he is hoping to mitigate the impact of the power crisis on DBCM’s South African output. While a 10% impact on production is expected, Noko says that DBCM is budgeting to produce 12,7-million carats for 2008, compared with 15-million carats in 2007, a lower expectation not as a consequence of the power crisis, but rather as a result of having sold off several operations. Noko does not expect the power crisis to slow the construction of the new
Voorspoed mine nor the South African Sea Areas marine-mining diamond project,
which has enough onboard power of its own to “light up the whole of Cape Town”. De Beers group MD Gareth Penny says the Diamond Trading Company (DTC) is transforming itself into local DTCs in Botswana, Namibia and South Africa in alignment with national priorities. Penny says that eight new De Beers Diamond Jewellers stores were introduced last year to create a total of 23 globally and a new watch collection is going to be launched. “We plan to double the number of stores through the course of this year,” Penny says. related article: Subprime diamond trade business hit eyes India, ChinaLONDON: De beers’ Diamond Trading Company sees a challenging US market this year due to the housing crisis, but its managing director says emerging markets will drive demand and rare stones will command higher prices. Shopping mood tips |
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