Mining holding Anglo American and diamond mining company De Beers which is part of this group have posted their performance reports for 2008. The global economic crisis started to bite into the business of major mining companies, including those associated with the Anglo American Group. In 2008, its total revenue decreased 7.6% (Tables 1 and 2). However, taking into account that it has disposed of two businesses, namely gold mining and paper and packaging, which used to net over $5 billion, the group’s revenue, without them, may on the contrary be considered as going up 7.9%. This is quite natural, since before August 2008 when prices for raw minerals and oil reached its zenith all the economic indicators displayed by mining companies were on the rise. This is why even the slump in prices and demand for raw minerals due to the global financial crisis in the fourth quarter of the reported year could not have any serious impact on their economic results. But as early as 2009, the picture may be drastically changed to the worse.
In 2008, De Beers even despite its diamond output going down from 51.1 million carats in 2007 to 48.1 million carats in 2008 (a drop of 5.8%) increased its sales to $6,888 million (Tables 3 and 4).
The company’s rough diamond sales went up a bit in 2008 because the Diamond Trading Company in January – September 2008 reached a record-high level of sales due to increased prices and demand in this period. Whereas in 2007 diamonds were priced at $115.82 per carat, in 2008 they went up to $123.20 per carat with approximately equal amounts of ore processed and yielding 0.55-0.57 carats per ton.
In the fourth quarter of 2008 the company’s sales dwindled significantly due to the financial crisis and liquidity crisis which hit the diamond cutting industry. The company’s diamond output in this period also decreased (Table 5).
As we see, in October-December 2008 De Beers decreased its production of rough diamonds compared with the previous quarter by 17.7% and by 11.1% compared with the relative period of 2007. In 2009, there may follow a further drop in diamond production by the De Beers Group by about 20%, which may put it almost on the same level with the ALROSA Group in terms of physical diamond output. However, the evident advantage of the DTC sales system will so far allow De Beers to preserve its leadership in the world diamond business.
Yuri Danilov, Senior Research Fellow, Department of Rough and Polished Diamonds Complex Economy, Institute for Regional Economics of the North (Federal State Scientific Entity)
