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Gold/Mining/Energy : SOUTHERNERA (t.SUF)

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To: PHILLIP FLOTOW who wrote (5010)	11/16/1999 12:38:00 PM
From: PHILLIP FLOTOW	Read Replies (1) of 7235

This is an portion of an article on DeBeer's, the full article is at: scmp.com Mining analysts believe CSO sales of uncut stones will top $5 billion for the first time this year, up from $3.3 billion last year. They attribute the increase to the booming US economy and one-off demand for millennium gifts. But one good year cannot hide the disappointing long-term financial performance of the company. After a decade of relentlessly rising stockpiles - which produce no income - De Beers shareholders would have been better off investing in government bonds through the 1990s. The bottom-line is that efficiency must improve across the group, costs must be cut, margins improved and the stockpile reduced. De Beers can no longer afford to carry the rest of the industry, Mr Penny argues. "De Beers now controls between 60 and 70 per cent of world supply through the CSO," he said. "This is not enough to justify the role it has traditionally played in holding costly buffer stocks and of advertising very expensively on behalf of the industry as a whole." PHIL

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