Anglo American Buys 40% Stake in De Beers Group for $5.1 Billion

The Oppenheimer family, which has owned the the De Beers Group  for more than 80 years, announced Friday that it will sell its remaining stake in the company to Anglo American plc for $5.1 billion in cash.

The move will boost Anglo American’s current 45 percent stake in De Beers to 85 percent. Nicky Oppenheimer will remain as chairman of De Beers and the recently hired CEO, Philippe Mellier, will remain in his position, the London-based mining company said.

Anglo American has entered into an agreement with CHL and Centhold International Limited (“CIL”), together representing the Oppenheimer family interests, to acquire their 40 percent interest in DB Investments and De Beers SA, the two companies said in a joint statement.

Under the terms of the existing shareholders’ agreement between Anglo American, CHL and the Government of the Republic of Botswana, the GRB has pre-emption rights in respect of the CHL Group’s interest in De Beers, enabling it to participate in the transaction and to increase its interest in De Beers, on a pro rata basis, to up to 25 percent. In the event that the GRB exercises its preemption rights in full, Anglo American, under the proposed transaction, would acquire an incremental 30 percent interest in De Beers, taking its total interest to 75 percent, and the consideration payable by Anglo American to the CHL Group would be reduced proportionately.

Anglo American had been the largest shareholder in De Beers since it became a private company in 2001 and as a longstanding shareholder in De Beers prior to that.

“De Beers’ geographically diverse portfolio comprises large scale, low cost mining assets with proven distribution, sales and marketing capabilities and further potential from its leading pipeline of greenfield and brownfield projects and an expanding consumer-facing footprint,” Anglo American said in the statement.

“Today’s announcement marks our commitment to an industry with highly attractive long term supply and demand fundamentals,” Cynthia Carroll, chief executive of Anglo American, said in the statement. “Underpinned by the security of supply offered by a new 10-year sales agreement with our partner, the Government of the Republic of Botswana, this forms a compelling proposition.… I believe that the benefits brought by Anglo American’s scale, technical, operational and exploration expertise and financial resources, combined with the unquestionable leadership of De Beers’ business and iconic brand will enable De Beers to enhance its position across the diamond pipeline and capture the potential presented by a rapidly evolving diamond market.”

Nicky Oppenheimer, De Beers chairman representing the Oppenheimer family interests, said: “This has been a momentous and difficult decision as my family has been in the diamond industry for more than 100 years and part of De Beers for over 80 years. After careful and deliberate consideration of the offer, and what is in the best interests of the family, we unanimously agreed to accept Anglo American’s offer. Anglo American is the natural home for our stake as they have been major shareholders in De Beers since 1926 and have a deep knowledge of the diamond business.”

The Minister of Minerals, Energy, and Water Resources, Dr. Ponatshego H Kedikilwe, on behalf of the Republic of Botswana said: “The diamond industry is a major contributor to our economy in Botswana. We are grateful to the Oppenheimer family for their vision and contribution to the diamond industry and to Botswana and we will proudly take forward that legacy with Anglo American. We look forward to building on the excellent relationship we have with Anglo American, both through our ownership of De Beers and through the Debswana joint venture.”

The transaction is expected to be accretive to underlying earnings before depreciation and amortization on fair value adjustments in the year of acquisition, Anglo American said.

De Beers Opens Ventures Capital Firm in Silicon Valley for its Man Made Diamonds

Element Six single crystal synthetic diamonds are used for cutting, optical, electronic and detector applications.

De Beer’s strategy of going outside the diamond industry to hire Philippe Mellier, who previously worked in the power generation and transport markets, may be paying off in ways that few of us anticipated.

What few people talk about, when discussing the De Beers Group is its full ownership of Element Six, the world’s leading manufacturer and supplier of synthetic diamonds, which is used for industrial applications.

This low-profile division of De Beers opened an office in Santa Clara, Calif. For its established a venture group capital fund that will fund starts ups using its man-made diamonds for applications in a range of industries, including optics, power transmission, water treatment, semi-conductors and sensors.

Element Six Ventures Group will focus on broadening its portfolio of “early-stage emerging-technology investments” in the Silicon Valley region, the company said in a statement Monday.

“Synthetic diamond’s extreme properties enhance performance in new technology applications to levels not otherwise possible,” said Susie Wheeler, Element Six Ventures Group magaing director. “Locating the Ventures’ office in Silicon Valley allows us to connect with new partners who, like us, want to develop these emerging technology investments.”

Element Six Ventures specializes in seed to late-stage technology operations that use synthetic diamond and other supermaterials demonstrating scalable and commercial potential. Since 2006, the firm has invested in seven companies operating within the clean-tech, semiconductor and electronics sectors. The companies include: California-based Group4 Labs, which develops Gallium Nitride-on-diamond semiconductor wafers for high frequency communication applications; Massachusetts-based EOI, which harnesses synthetic diamond-enabled electrodes to generate ozone for chemical free sterilization and sanitization of water; and UK-based Diamond Detectors, which manufactures synthetic diamond radiation detectors which are used on the Large Hadron Collider at CERN (European Organization for Nuclear Research).

Element Six’s main office is in Luxembourg and the company has manufacturing facilities in China, Germany, Ireland, the Netherlands, Sweden, South Africa and the UK. The company’s name derives from carbon, the core ingredient in diamonds.

Diamonds Stolen from De Beers Factory

NamGem factory,  photograph from The Namibian

A unit of the De Beers Group said that a “substantial” amount of diamonds have been stolen from its cutting and polishing facility in Namibia, according to media reports.

The De Beers unit, Namgem, reported that rough and polished diamonds were stolen from its factory in Okahandja, about 40 miles from the Namibian capital of Windhoek.

Namgem is the first diamond cutting company to be established in Namibia. It is controlled by Namdeb, a venture equally owned by the Namibian government and De Beers, the world’s largest diamond producer. The mining operation was established in 1999 and employs about 120 people, according to De Beers’s Web site. Lazare Kaplan International Inc. of New York operates the plant.

De Beers Reports Record Rough Diamond Sales

Rough diamonds image courtesy of De Beers Group

De Beers Group said Tuesday that sales of rough diamonds during the first half of 2011 through the Diamond Trading Company (the rough diamond distribution arm of the De Beers) increased 33 percent, year-over-year, to $3.5 billion This is the highest ever sales figure recorded for the first half of the year, buoyed by continued retail demand from the Indian and Chinese consumer markets and stronger than expected demand in America.

The company, which produces more than a third of the world’s rough diamonds, also reported record EBITDA of almost $1.2 billion, a 55 percent increase over the first the first half of 2010, reflecting the impact of “excellent” price growth during the period ended June 30. It predicts continued demand for the remainder of 2011.

“Sales during the period have been exceptional, driven mainly by continued growth in the Middle East, Indian and Asian retail markets and their impact on rough price growth,” De Beers said in a statement. Despite the ongoing turmoil with the global economy, we are encouraged by the continued strong growth in price and demand during the first six months of 2011. De Beers is confident that the exceptional growth in retail markets in India and Asia will continue to drive demand for diamonds.”

The company also said that reports from the recent jewelry tradeshows in Las Vegas “indicate that the all-important Christmas season in the U.S., and Diwali, are set to be strong.”

At a De Beers board meeting in Luxembourg on July 19, Philippe Mellier was appointed CEO of the De Beers Group. The company announced in May that he was being appointed. In the same meeting, Stuart Brown, CFO, said he would be resigning from the board, which will take effect at the end of July. He was with Be Beers for almost 20 years.

De Beers—which owns mines in South Africa, Botswana, Canada and Namibia—said it has continued to focus on efficiency improvements and on maintaining a lower sustainable level of overhead base, which it says has helped the bottom line. In the first six months of 2011, De Beers’ production totaled 15.53 million carats, an increase of 100,000 carats over the same period in 2010.

In its retail activities for the first-half of the year, Forevermark, the De Beers Group owned diamond brand, continues to expand into the retail markets of China, Hong Kong and Japan, and has recently launched in India, Singapore and the Caribbean. The brand is now available in a small number of stores in the U.S., with further expansion planned later this year. During the same period, De Beers Diamond Jewellers (De Beers’ joint venture with LVMH) announced the launch of the brand in China with the opening of its first mainland store in Beijing, its first store in Kazakhstan in Almaty and a new store in Dubai. The company will continue to expand in 2011 with in China and Hong Kong.
 
Element Six, De Beers Group industrial diamond group, “recorded a good first half performance in respect of both sales and profitability, with robust demand across its product ranges,” De Beers said in its earnings report. “Operating performance was impacted by, inter alia, operating challenges and a weak US dollar, but Element Six is well positioned for the remainder of the year.”

De Beers Diamond Sales Decline 14%

De Beers Group, the world’s largest producer of diamonds, reported a 14 percent drop in overall diamond sales and a similar fall in rough diamond sales for the first six months of the year. The company’s profits fell about 50 percent and it announced that it will reduce diamond output from its mines in response to the “challenging” conditions.

The diamond mining and sales company said total sales decreased 14 percent to $3.3 billion for the first six months of 2012, compared with $3.9 billion in the first half of 2011. Sales of rough diamonds by the Diamond Trading Company, the rough diamond distribution arm of De Beers, in H1 2012 were $3.1 billion (including those through joint ventures).

Profit before finance charges and taxation for the first half of 2011 was $502 million, down from $1 billion a year earlier.

The company blamed “lower demand and changing product requirements from sightholders (75 approved buyers of De Beers rough diamonds under long-term contracts),” the company said in a statement. “While overall consumer demand for polished diamonds remained relatively healthy, sightholder demand was impacted by increased stock in the cutting centers, tightening liquidity and challenging conditions in India. However, early indications are that the US market continued to perform well, and the Chinese market, while slowing considerably, still showed positive growth.”

In the first six months of 2012, De Beers’ production totaled 13.4 million carats, compared with 15.5 million carats in the first half of 2011.

Philippe Mellier, chief executive of De Beers, reportedly said the company will continue to reduce its output through the end of the year and allow its sightholders to hold onto their inventories for up to six months, far longer than normal.

In its outlook, De Beers says it “expects trading conditions in the mid-stream to remain challenging during the second half of 2012 … (and) expects to see moderately positive growth in global diamond jewelry sales for the full year 2012, albeit at relatively modest levels, especially when compared to the exceptional growth levels seen in 2011. In the short term, the USA, China, the Gulf and Japan are expected to contribute the bulk of the growth, while India and Europe are expected to remain weak.”

Devon Pike Named CEO of De Beers Diamond Jewellers U.S.

With the news of the hiring of Philippe Mellier as De Beers CEO on Monday, another high-profile hiring by a division of the diamond giant went a bit under the radar.

De Beers Diamond Jewellers said Monday that Devon Pike has joined the company as chief executive officer of its U.S. business. Pike is a veteran merchandising, marketing and retail executive, who previously served as a senior vice president at Juicy Couture after spending six years at Polo Ralph Lauren.

De Beers Diamond Jewellers was established in 2001 as an independently managed and operated company by LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, and De Beers SA, the world’s premier diamond mining and marketing company.

“She (Pike) is a highly respected retail industry executive, who understands how to develop and expand sought-after brands,” said Francois Delage, De Beers Diamond Jewellers CEO. “The US market is strategic for us and the recruitment of Devon is a sign of our commitment to further developing our activities in one of the world’s largest jewelry markets.”

Before joining De Beers, Pike was SVP of Digital at Juicy Couture, where she had been since May 2009. She previously held the position of SVP GMM for Juicy Couture’s North America and Travel Retail business.

Prior to Juicy Couture, she spent six years at Polo Ralph Lauren, where she held roles managing global business development, and as VP, General Merchandise manager of the Rugby Ralph Lauren brand. Pike joined Polo after holding a series of positions of increasing responsibility first at May Department Stores and subsequently Federated Department Stores. She is a graduate of Brown University and Harvard Business School.

De Beers Names French Transport Exec as New Group CEO

Philippe Mellier

The De Beers Group has gone outside the diamond industry to appoint Philippe Mellier as its new chief executive officer.

Mellier, currently the president of Alstom Transport and executive vice president of Alstom s.a., was selected after what the diamond giant described as “a wide-ranging search.” He will formally join De Beers in July and will chair the company’s executive committee and be appointed to the De Beers s.a. Board.

As president of Alstom Transport, a French multinational conglomerate with interests in the power generation and transport markets, Mellier oversaw a growing business of 27,000 employees with sales of almost 6 billion euros ($8.5 billion) during the last fiscal year.

“Having led the transformation of the diamond industry over the past decade, this appointment signals our determination to lead in a rapidly changing world,” Nicky Oppenheimer, De Beers Board chairman said in a statement Monday. “In Philippe we have found a proven leader with a reputation for delivering results while shaping businesses for the long-term.”

Oppenheimer added, “With several large upstream projects underway and the rapid emergence of major downstream markets, De Beers stands on the cusp of an exciting new period of growth. To seize this moment, we were determined to find a leader with a world class track record of delivering large projects, understanding the needs of key stakeholders including government partners and clients, and an instinct for shifting consumer patterns.  I am excited by the dynamism and fresh perspective that Philippe will bring to De Beers.”

Mellier was named president of Alstom Transport and member of the Alstom Executive Committee in 2003. A year later he was appointed executive VP of Alstom Group.

Prior to Alstom, he was named chairman and CEO of Renault Trucks in 2001 and served as a member of the Volvo Group Executive Committee. In 1999, he was senior VP in charge of European Sales for Renault and was a member its management board.

He began his career in 1980 with the Ford Motor Company where he occupied various senior management positions over 19 years, including an appointment as vice president of Marketing, Sales and After Sales Activities in 1997 for Ford of Europe.

Mellier graduated from ENSTA, the Paris-based French institute for engineering education and scientific research, with a degree in mechanical engineering in 1979. He received an MBA from INSEAD, Fontainebleau, France-based business school in 1980. He is fluent in French, English, Spanish and Portuguese.

Global Diamond Demand and Prices are Up

During the past couple weeks, diamond centers throughout the world have been reporting on exports and imports of the precious commodity and in every case the results have been strikingly positive when it comes to demand and price.

India
India on Tuesday was the most recent place to report its earnings. The country’s Gem and Jewellery Export Promotion Council provided results for the 2010-11 fiscal year, saying it has had the largest increase in diamond exports in the past three years. The diamond industry is critical to India, which cuts nine out of ten diamonds produced in the world, because it accounts for 16.6 percent of its total merchandise exports.

Total rough and polished diamond exports increased 46.9 percent year-over-year to $43.14 billion, according to GJEPC.

The growth in the sector was primarily driven by polished diamonds, which registered a year-over-year increase of 54.9 percent for FY 2010-11 to $28.25 billion. Polished diamonds accounted for 65.5 percent of the total exports.

The most recent year saw the United Arab Emirates emerge as the largest exporting destination with 47 percent, followed by Hong Kong with 22 percent and the U.S. with 11 percent.

“Today the industry is looking at a staggering growth … the most we have seen in the past three years. India today is looked upon as one of the leading players in the global arena and at GJEPC; we believe that this growth path will continue in the coming year as well,” said Rajiv Jain, GJEPC chairman.

Israel
The Israel Diamond Industry recently presented its first quarter results. Net polished diamond exports for the period increased 45.7 percent in value, year-over-year, to $2.1 billion, according to data by Israel Ministry of Industry, Trade and Labor’s diamond controller Shmuel Mordechai. Net rough diamond exports rose 39.6 percent in value to $1.2 billion.

Net import of polished diamonds for the January to March-period rose 24.9 percent to $1.1 billion. Net rough diamond imports increased 48.5 percent to $1.2 billion for the period.

The United States remained Israel’s largest market with 45 percent of total exports ($694 million). Hong Kong accounted for 26 percent ($506 million), Switzerland 9 percent ($351 million), Belgium 8 percent ($190 million), China 2 percent ($63 million) and the rest of the world 10 percent.

Antwerp
The Antwerp World Diamond Centre Diamond Office, which represents the Belgian diamond industry, recently said polished diamond exports in the first quarter rose 30.1 percent in volume to 2.34 million carats, while its value jumped 30 percent to $3.43 billion.
 
In the January through March period, Belgium exported 34.1 million carats of rough diamonds, a slight decline of 2.1 percent, but in value there was a substantial increase of 29.1 percent to $3.52 billion.
 
For the same period of 2011, Belgium imported 2.43 million carats of polished diamonds, a 21.5 percent increase for the year, with a 26.2 percent rise in price to $3.20 billion.
 
The country imported 31 million carats of rough diamonds, a decrease of 2.2 percent on the year, but in financial terms there was an increase of 40.8 percent to $3.38 billion.

United Arab Emirates
The Dubai Diamond Exchange, a subsidiary of the Dubai Multi Commodities Centre Authority and a diamond trading platform, recently reported that total diamond trade volumes for 2010 reached 268.7 million carats, up 50 percent year-over-year, while the value of the precious gem doubled to $35.1 billion.

Polished diamond imports during the twelve months of 2010 rose 88 percent in volume to 90 million carats ($13.3billionn) and polished diamond exports rose 128% to 73.6 million carats ($14.6billionn). Dubai also recorded a 100 percent increase in the volume of total polished diamonds traded, reaching 163.8 million carats.

Rough diamond imports, rose by up to 13 percent during the year recording 50.4 million carats and exports by 3 percent at 54.7 million carats. However, by value, the increase was much more dramatic. The value of rough diamonds imports rose 83 percent to $3.3 billion and rough diamonds exported rose by 81 percent to $3.8 billion. Furthermore, In addition, Dubai’s rough diamond trade increased by 7 percent to 105 million carats, with the value up by 82 percent to $7.1 billion.

Dubai's top trading partners for the year were India, Belgium, Hong Kong and Switzerland, with growing trade emerging from new markets such as Angola and the Democratic Republic of Congo.


De Beers
You may have noticed that in all of these reports there’s a constant theme of dramatic increases in diamond prices, particularly for rough. Varda Shine, CEO of the Diamond Trading Company, the marketing arm of De Beers Group, says the price reflect market conditions and prices for rough will continue to rise through 2011. De Beers, which accounts for nearly 40 percent of the global diamond supply, plans to increase output by 20 percent to 38 million carats this year and raise rough diamond output further to 40 million carats, Shine said in the Business Standard newspaper in India. However, she noted that the there are no new mines ready to come on line that would help meet demand.

She told the publication that growth is and will continue to be driven by India and China. She added that the DTC expects a decline in Japan due to the March earthquake and tsunami but expects demand to increase in the U.S., which is slowly recovering from a deep recession.

De Beers Issues Kimberley Process Support Statement

The Kimberley Process Certification Scheme received an important statement of encouragement by the world’s largest diamond company.

The De Beers Group reiterated its support in the Kimberley Process—a global effort to end the trade of “blood” or “conflict” diamonds—in a statement at the end of its annual financial report Friday. The international organization of diamond industry representatives and non-governmental organizations has come under a great deal of criticism (including from this publication) in its handling of the situation at the controversial Marange diamond field in Zimbabwe.

“De Beers is committed to the highest ethical and environmental standards so that consumers can be proud of the diamonds that they own and wear,” the diamond giant said in its statement. “Furthermore, the DTC (Diamond Trading Company) has offered guidance to its sightholders on the identification of potentially illegal and unethical exports from Zimbabwe’s Marange region. While De Beers has no mining interests in Zimbabwe, the group supports the ongoing dialogue between the Government of Zimbabwe and the Kimberley Process Chair.”

The Marange diamond field, which many say may contain the largest deposit of diamonds in the world, has been the scene of murders and other human rights abuses by Robert Mugabe’s government and its military. The Zimbabwe government say those abuses have been settled but human rights advocates say that these abuses continue; that money from mines is being used to finance the ruling party’s operations, including upcoming elections; and diamond smuggling is rampant.

The human rights abuses eventually led to Zimbabwe's suspension from the Kimberley Process. The KP voted to reinstate Zimbabwe in July, 2010, allowing two supervised exports of rough diamond from the Marange production in August and September. The date of the second sale was changed and the sale was held without public knowledge.

The issue of reinstating Zimbabwe into the KP Certification Process was the main item on the agenda when the organization met in November, 2010 in Jerusalem. After four days of closed door meetings, participants failed to reach a conclusion. The issue is still unresolved with communications being issued among KP participants and very little information being presented to the public.

For its part, Zimbabwe government officials insist that it is been approved to sell diamonds from Marange through the KP certification scheme. In addition, it has made statements that if the organization refuses to allow it to sell its diamonds, it will do so anyway, thus, possibly flooding the market with diamonds and reducing their value.

Meanwhile, a variety of organizations have already either banned its members from dealing in diamonds from Marange or have encouraged their members not to do so, including the Responsible Jewellery Council, RapNet, and MasterCut and the Company of Masters Jewellers in the U.K.

You can read about this issue on this blog by doing a search for “Kimberley Process” or “Zimbabwe.”

De Beers 2010 Sales Up 53 Percent

De Beers Group said Friday that total diamond sales in 2010 increased 53 percent year-over-year to $5.88 billion. Sales of rough diamonds in 2010 by the Diamond Trading Company (the rough diamond distribution arm of De Beers) totaled $5.08 billion, compared with 3.23 billion in 2009.

The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) grew to $1.43 billion, an increase of 118 percent over 2009.

The South African based-company said strong demand in 2010 drove a rebound in the prices of DTC rough diamonds by an average of 27 percent, to levels which are above those which during onset of the economic crisis. A considerably reduced cost base enabled De Beers to be highly cash generative with a free cash flow of $943 million, compared with $35 million in 2009.

As demand for diamonds from the industry increased, so too did De Beers production from its wholly owned and joint venture operations in Botswana, South Africa, Namibia and Canada, the carats recovered in 2010 increased 34 percent to 33 million.

“2010 was an extraordinary year that saw De Beers rapidly move from stabilization to strong recovery,” the world’s leading rough diamond company said in a statement. “The price of rough diamonds has recovered strongly as confidence returned to most parts of the diamond pipeline. Notwithstanding this, the industry is not back to pre-recessionary levels in terms of production or sales and a high degree of global uncertainty remains. While restocking picked up throughout the year, it was also clear that consumer demand rebounded, as evidenced by the extraordinary growth in China and India and the better than expected retail performance in the U.S. during the Christmas buying period.”

In Botswana, Debswana commenced the Cut-8 expansion project at Jwaneng mine. Cut-8 represents the largest ever investment in Botswana and is expected to yield 100 million carats worth approximately $15 billion over the life of the mine, which will be extended until at least 2025.

De Beers continued to expand its proprietary diamond brand, Forevermark, throughout Asia in 2010. Forevermark is now available in 348 doors globally (a 40 percent increase on the beginning of 2009), and will continue to expand in the rapidly growing Chinese market in the year ahead, the company said. Forevermark will launch in India in the first quarter of 2011 and the company said it is in an "exploratory phase" in the US, yielding positive early consumer research."

In March, De Beers concluded the refinancing of all its international and South African debt on satisfactory terms, extending the tenor of facilities to 2013. During November, the Group achieved normalized terms in respect of debt and EBITDA measurements, some two years earlier than planned.

At the end of 2010, net debt excluding shareholder loans, had fallen to $1.76 billion compared with $3.20 billion at the end of 2009.

“While the directors remain cautious about the diamond market in 2011, continued positive growth is expected, albeit at a lower rate,” the company said. “The world is not yet back to where it was prior to the onset of the economic crisis, and risks to growth remain. For the foreseeable future, continued recovery in global economic outlook and strong retail confidence are expected to underpin positive growth in consumer demand for diamond jewelry in 2011.”

The statement continued, “The U.S. market is expected to continue its recovery and the exceptional growth seen in China and India is expected to be sustained. Global economic expansion and retailer sentiment are supportive of further DTC sales growth in 2011, during which time total production for the De Beers Family of Companies is expected to reach 38 million carats, approaching full production which will, as planned, be achieved in 2012.

“In the longer term, the supply and demand dynamics of diamonds remain attractive. Diamonds are a finite resource and western consumer markets are recovering at the same time as demand growth in the emerging markets of China and India is expanding rapidly.”

De Beers Diamond Sales Up 27%, Cautious Outlook

The De Beers Group said Friday that total sales increased 26 percent year-over-year to $7.4 billion. Sales of rough diamonds by the Diamond Trading Company, the company’s the rough diamond sales and distribution arm, increased 27 percent for the year to $6.5 billion—the second highest level of sales for the diamond giant. Diamond prices for 2011 rose 29 percent as diamond production fell 5 percent to 31.3 million carats, compared with 2010.

EBITDA for the year increased 21 percent to $1.7 billion with third party debt reduced to $1.3 billion, compared with $1.8 billion in 2010.

De Beers described 2011 as “a year of two halves.” The first “saw exceptional consumer demand growth which, when coupled with lower than historical levels of global diamond production, resulted in very strong polished and rough diamond price growth,” the South African-based company said. “Rough diamond prices in this period included an element of speculative buying in the trading centers.”

However, in the second half of the year demand fell as “both retail and cutting center sentiment was impacted by the challenging macro-economic environment, restricted liquidity (particularly in dollars) in the cutting centers and a slowdown in the rate of growth of consumer demand at retail,” the company said.

De Beers Diamond Jewellers, a diamond jewelry retail venture with LVMH, reported “good growth” in sales across all regions, with greater China particularly strong. “The China opportunity is a priority for De Beers, with further 2012 expansion plans following the opening of stores in Beijing, Tianjin, Dalian and a second Hong Kong store in 2011,” the company said.

De Beers Forevermark diamond brand continued its expansion as it entered India and the U.S. during the second half of the year.  Forevermark is now available in 658 retail doors across nine markets, an increase of 89 percent compared with 2010.

In its outlook, De Beers said that despite economic uncertainty and “barring a global economic shock,” it expects “to see continued growth in global diamond jewelry sales, albeit at lower levels than the exceptional 2011 growth,” driven by luxury goods sales, improving sentiment in the US (the largest diamond jewelry market), continued growth in China, and “the positive impact of the 2011 polished price growth on retail jewelry prices.”

On the production side, the company said it does not expect an increase in diamond carat production in 2012 and that it will “ramp-up profitable carat production as Sightholder demand dictates. In the medium to longer term, the industry fundamentals remain positive with consumer demand, fueled by the emerging markets of China and India, outpacing what will likely be level carat production.”

This should be the last time in the 80-plus-year history of De Beers that it will file an annual report under the ownership of the Oppenheimer family. On November 4, 2011, the family agreed to sell its 40 percent interest of De Beers to its main partner, Anglo American, for $5.1 billion in cash. The transaction is expected to close during the second half of 2012.

On Wednesday, De Beers named Gareth Mostyn as its new CFO and board member.