De Beers' Sales Fall As Diamond Demand Slumps

De Beers' Sales Fall As Diamond Demand Slumps

De Beers reports a 16% fall in sales as the global economic downturn hits demand for diamonds.

Total sales slumped to $6.1bn (£3.93bn) in 2012 - compared with $7.3bn the year before - and sales of rough diamonds fell by 15% to $5.5bn.

But the producer and marketer - which famously coined the slogan "a diamond is forever" - said demand in its key markets, the US, China and Japan continues to grow, although at a slower rate than in 2011.

It forecast "moderate growth" in demand in 2013, driven by a growing appetite for the stones from China and India.

Diamond analyst Edward Sterck at BMO Capital Markets said these countries were the industry's two big growth markets.

"The weakening of India's rupee and a change in China's leadership hit sales in these regions this year," he told Sky News.

"But we are starting to see a reversal of this.

"The weak rupee has also made gold much more expensive in India, so people are starting to look to diamonds as alternatives.

"And as consumer confidence returns in China, diamonds will become a greater part of its gift-giving culture."

He added that demand is likely to pick up over the next year and beyond.

"When you combine it all together, there will be fairly modest demand growth this year and next, but then 5% to 7% growth per annum in US dollar terms after that," he said.

De Beers, which is majority owned by mining giant Anglo American, revealed plans to spend 20 billion rand (£1.46bn) on a new underground diamond mine in South Africa.

The investment comes despite a wave of violent strikes across the region's mines last year which hit many of the big mining company's profits.

De Beers said it would create 3,000 jobs at the underground mine at Venetia, which is currently operating as an open-cast operation.

It estimated the new mine, which will become the largest in South Africa, will yield 96 million carats of diamonds.

The company's chief executive Philippe Mellier said the investment would enable the company to provide greater certainty around long-term supply.

"This new underground mine will provide a large and predictable supply of rough diamonds for decades to come," he said.

De Beers was founded in 1888 and has been run by Oppenheimer family members or trusted associates since the late 1920s.

It mines and sells around 35% of the world's diamonds.