Rough Diamond Shortfall, Shifting Prices and Ekati – De Beers in 2012

De Beers CEO Philippe Mellier said that due to the uncertain global economic outlook, he could not say what if any, the shortfall between diamond production and consumer demand would be through 2012. He also said that he could not comment on when or whether rough diamond prices would increase this year.

He noted, however, that rough diamond prices had to be seen in context of the huge price increase over 2011. This increase had been strong over the first half of the year, fading out and rolling back towards the end of the year. Any consideration of prices would, therefore, have to take the strength of demand into consideration.

Mellier said at conference call that followed the annual results announcement that all economic forecasts for the first half of 2012 were uncertain, with greater clarity of outlook only coming in the second half. The CEO observed that the softness in the market had made Sightholders “nervous and cautious.”

He however noted that despite the economic uncertainty, all luxury goods had held up well in consuming markets, with strong demand all over the world, making him look forward to an exciting 2012.

Mellier said that the company’s production of rough diamonds in 2012 was likely to be in the region of 31 or 32 million carats – about the same as in.

In response to a question, Chief Financial Officer Gareth Mostyn said that while De Beers was “interested in all opportunities like that of acquiring the Ekati mine,” he could not disclose what if any plans the company had in regard to this.

Answering another query, Mellier said that the Botswana government had not yet indicated whether it would exercise its option to increase its holding in De Beers.