Article today on debeers:
LONDON, April 19 (Reuters) - Diamond giant De Beers said on Tuesday that sales of uncut stones were running ahead of year ago levels so far in 1999 with strong U.S. and European demand offsetting a fragile Asian market.
"We've had three sights (so far this year) and sales in those three sights have certainly been ahead of last year...We hope this year will be better than last," Chairman Nicky Oppenheimer told Reuters in an interview.
But while industry sentiment is improving, the group's Central Selling Organisation (CSO), which handles 70 percent of the world's rough (uncut) diamonds, would be keeping a tight rein on supplies, he said.
The organisation operates a single marketing channel for diamonds which are sold at 10 annual "sights" to a select group of approved buyers.
"We're being very cautious at De Beers," Oppenheimer said. "We're looking at each sight on its merits very carefully to make certain that we don't push too many goods out into the market."
Sales by the London-based CSO slumped 28 percent to an 11-year low of $3.345 billion in 1998 -- hammered by plunging demand in Japan and East Asia -- triggering a sharp fall in De Beers' profits and forcing the company to cut its 1998 dividend.
The outlook for 1999 is brighter, although Oppenheimer noted in the company's annual report that there was still a "high degree of economic uncertainty."
"The market continues to be divided. In America and Europe we have seen increasing demand last year and early indications are that they continue to show increases," he told Reuters.
"In Japan and East Asia the position is not so encouraging. You could say the decline is slowing and maybe has stopped, but it's certainly a long way down from the high point of the past."
On the supply side, Oppenheimer predicted that shipments would remain low from both Angola and the Democratic Republic of Congo.
"It looks as though the incipient civil war in Angola and the same in the Democratic Republic of Congo will continue, and that obviously affects production of diamonds...As things stand at the moment we would expect supplies to continue low from those two countries this year."
Oppenheimer added that his company remained committed to South Africa and had no intention of following sister firm Anglo American Corp of South Africa Ltd to London. Anglo is due to list in shares on the London Stock Exchange on May 24.
He also defended the cross-holdings between the two companies, arguing that shares in Anglo had proved a sound investment for De Beers -- especially in light of a surge in Anglo stock in recent months.
"Obviously we look on this as a counterbalance against the diamond trade and the way the share price is performing at the moment this has been a good asset for De Beers to hold."
Copyright 1999 Reuters Limited.All rights reserved. |
