The world's largest diamond dealer De Beers mine closure behind

"Diamond lasting far spread a wing." Classic ads saying how many words a woman's innocence lingering feelings Man dreams of wealth, however, the current owner of this ad DeBeers (De Beers) "to the name of love, money for the media "business a little bit deserted.

According to the British "Financial Times" reported February 23, with the sharp drop in diamond sales, the world's largest diamond producer De Beers earlier this year to freeze production in Botswana, the world's largest archive, some of the highest value diamond mine.

For "mine closure" the reason, De Beers Botswana Chief Executive Officer of the business希拉卡马(Sheila Khama) on the media call a spade a spade: "things can not sell, why should we produce?"

Antwerp International Diamond Center, more and more "sell" of diamonds, De Beers made the "mine closure" act naturally. The Center is the world's largest diamond trading center, its corporate affairs, Chief Executive Philip Claes reluctantly explained: "When people refine their shopping list, the first it will be removed (Diamond), This is the largest we have encountered Problem. "

Together with the decline in demand for diamond prices also. According to Diamond Polished Prices.com price index data shows that in August last year to the end of the diamond cutting prices 30 percent, natural uncut diamond prices by an average of 2500 U.S. dollars per carat dropped to 1400 U.S. dollars, or up to 44%, is expected to decline in 2009 more.

The seriousness of the situation has been general manager of De Beers庞尼(Gareth Penny) recognized him in the company's 2008 annual results released in video, said: "The worse the market is covered by the liquidity caused by our products has never been concerned about the extent of not so high today. "

Fourth quarter sales of only 044 million U.S. dollars

February 25, De Beers Headquarters Administration of the Foreign Affairs Department in response to reporter's e-mail that the first nine months of last year, DTC (De Beers diamond billet's professional distribution and promotion agencies) demand for rough diamond prices, sale prices higher into the fourth quarter, with the further deterioration of the global economy, rough diamond sales fell sharply.

Fourth quarter diluted significantly worse performance of the De Beers annual results. Administration of the Foreign Affairs Department said in the message, in 2008 the company's total sales than in 2007 only "a slight increase."

De Beers February 20 release of 2008 annual financial report can illustrate this point. Reported, in 2008, the company posted sales of 6.888 billion U.S. dollars, more than 2007 of 6.826 billion U.S. dollars increased by only 1 percent; and the first three quarters of sales rose 7 percent, reaching 6.84 billion U.S. dollars, this also means that De Beers four-quarter sales of 044 million U.S. dollars only. In addition, before interest, taxes and profit before amortization (EBITDA) for 1.222 billion U.S. dollars, with 1.216 billion U.S. dollars last year was basically the same.

庞尼in a statement to explain the situation facing the four quarters: "the global economic crisis on the retail diamond processing center diamond capital flows and the impact of a serious demand, which will affect the company's rough diamond sales."

The United States has always been the biggest buyer of diamonds, accounts for the global buy 40-50 percent, but the U.S. economy into recession. Antwerp Diamond Center is expected to North America in 2009 on the demand for diamonds will be reduced 15 percent, Europe 10%, Japan also fell 5%.

To cope with declining demand,庞尼also raised a concern has been the industry plan: significantly reduced. He stressed that "De Beers is the industry's first company to make this action."

As early as January of this year, De Beers announced, up until April, the supply of diamonds give the original customer will be halved, and is now and the trade unions to negotiate a possible layoff measures.

In fact, De Beers in the third quarter of last year the market began to reduce the output of the original drilling. Reported, De Beers last year, three-quarter output fell 4.3 percent, to 13,111,000 karats; four-quarter output of 12.3 million karats than the third quarter of 13,110,000 karats continued to decline 6%, while in 2008 the annual diamond production 48,100,000 carats, while the 2007 annual production 51.1 million karats for the yuan, down 5.9%.

Compared with the sales, cash flow position of greater impact. Last year, De Beers generated by operating activities cash flow for the 700 million U.S. dollars, representing 2007 of 844 million U.S. dollars fell 17%.

Decline in profits is also reasonable. In 2008, the company net profit in 2007 from the 4.06 billion U.S. dollars fell to 3.55 billion U.S. dollars, up 12.56 percent decline. De Beers Administration of the Foreign Affairs Department to the reporter's explanation is that, in addition to declining sales led to increased financial costs, but also by the U.S. dollar and the impact of the company to repay debts.

De Beers, like peer-days have been bad. Stefani jewelry (Tiffany) last November to December quarter sales to shrink 21 percent, well-known jewelry brand Van Cleef & Arpels (Van Cleef & Arpels) last month, also said that 20 years is facing the worst market situation, and claims that "At present, do not see any reason for optimism."

Bitterness seems to only just begun. A report on De Beers in January this year, market performance data widely reproduced by the media, "in January of De Beers rough diamond sales of 100 million U.S. dollars, and in January 2008 for 600 million U.S. dollars, up 83 percent decline."

庞尼expected this year, the situation is still very much a "challenge", diamond demand was likely around Christmas 2010 in the recovery.

Resources to strengthen the monopoly

庞尼in Antwerp in November last year to attend international diamond summit, he said: "The 10 percent decline in demand is not the end of season, the price of diamonds is being amended."

The emboldened庞尼De Beers is the trump card - the scarcity of diamonds. "Do not forget that we operate is not an ordinary commodity, we are operating can not be a substitute for increasingly scarce valuable resources."

More It is worth mentioning that, De Beers spent about a hundred years of time to control the supply of diamonds in order to manipulate the market. Economist Andy Xie said: "apart from the diamond cartel De Beers, the world is still not a single industry can successfully achieve a monopoly."

The 19th century to the 20th century, because of the global diamond mining mainly concentrated in South Africa, De Beers purchased in the late 19th century all the diamond mines of South Africa, almost complete control of diamonds in the market flow, it will be handed over to the diamond trading in London Central organizations to determine the selling prices of diamonds. 20th century 80's, about 90% of global diamond blanks are from De Beers's Central Selling Organization (CSO) of the sales.

However, with the diamond mines around the world found that the increase in quantity, the South African diamond mining accounts for the proportion of the world slowly fell to 11%. At this point, De Beers has been impossible to come up with sufficient funds to conduct a comprehensive acquisition, and from 1991 to 1995, the United States, Russia and other countries of its judicial authorities charged a suspect in violation of the anti-monopoly law has also made the monopoly of De Beers by challenges.

De Beers stake in the structure of further differentiation. At present, 45% stake in the company for the Anglo-American Corporation (Anglo American) holders, 40% for Oppenheimer (Oppenheimer) family holds the remaining 15% stake in Botswana in Africa to hold the Government of the Republic.

In this case, De Beers began from "the industry guardian" to "Best Supplier" change. De Beers put庞尼positioned as a "demand-oriented enterprises," he said in a statement: "At present, the global diamond De Beers accounted for 40% of the market, the company mainly through the world's large customer base and hundreds of diamond trading company small companies to tender for the sale of product flow. "

From 90% to 40%, De Beers monopoly in terms of resources seems to a serious decline in the extent, but the De Beers diamond resources on the control has never relaxed.

Who had a senior job in the DTC staff Dr. Liu said: "In recent years, De Beers has been selectively looking for high quality resources and access to resources on relentlessly, but the form has changed, unlike in the past, all incorporated into the capsule in . On the one hand, De Beers with the league set up around the relationship between the exploitation of persons, on the other hand, other parts of the world to step up acquisition of diamond mines. "

Reported, in 2008, De Beers Snap Lake mine in Canada and Victor mining reached 1,600,000 karats, and 2007, only 81,000 karats. Snap Lake Mine and Victor Mines are De Beers in 2005 to acquire the drilling of new mines, the former production early last year, which started in the second quarter of last year. In addition, the Voorspoed mine in South Africa had commenced, the mine was originally scheduled to run in November this year.

De Beers will also extend diamonds. Last year, De Beers controlled 60% of Element Six, Inc. (the world's largest manufacturer of synthetic diamond) sales 500 million U.S. dollars, and in 2007 as compared to endogenous growth (organic growth) by 25%.

Earnings for the King

However, De Beers, the demand at the core of strategic change quite subversive, because previously, the market estimates, De Beers's strategic shift is expected to be the end of 2008 to be reflected in the preliminary 2009.

De Beers to sell mineral rights and the reduction of the number of customer behavior, indicating that control of the company has shifted attention to the supply of diamonds yield.

In September last year, De Beers completed its Cullinan mine in South Africa to sell, and Tanzania's Williamson diamond business sold to Petra Diamonds, has basically completed its divestment of its assets from the non-profit two-year plan.

At the same time, De Beers DTC sales of units of its London, South Africa, Botswana, Namibia and the basic Canadian customers, from 93 to 79 cuts.

De Beers will also focus on the sale of their property rights. In September last year, De Beers launched its "DTC franchise business plan", and the project awarded to four pre-placement.

Have been involved in the project Dr. Liu said: "This plan in fact expand the De Beers diamond industry chain because jewelry retailers and non-placement will be able to cooperate with the company to promote the brand."

庞尼in January of this year's conference called for placing the goods to a joint operation, "you have to assume responsibility, to use innovative marketing projects and products, find and exploit niche market (niche market) and emerging markets, such as marriage and the engagement ring will be in the whole economic cycle, very active product. "

De Beers Consolidated Mines Company's operations director for the company to give up root狄尔特哈the hands of some of the resources provided some explanation, "We want to concentrate on those which bring about the expected return on assets can be better positioned to develop." He also on the "Financial Times" evaluation of the company's plans are "win-win", "We are able to return the assets of the resources should be screened for, the shareholders are satisfied with this. We are a highly dependent, we also to other companies from small to big growth opportunity, it is clear that to do so to benefit the entire industry. "

庞尼previously expressed by the "worst market situation is caused by the mobility of capital", it seems that for its parent company, Anglo-American De Beers company and other shareholders of 500 million U.S. dollars loan to lay a foreshadowing.

In February 20 last year, annual financial data released video in庞尼said: "This is a wise move to keep the company profitable." While the Anglo-American companies are also external prediction, after the borrower, De Beers should be no need for additional capital injection.

But regardless of what De Beers has made a strategic reform, the demand is the mother of profit. In response, De Beers in 2008 in the prediction results in: "Recent market research shows that American and Chinese consumers are still eager to buy diamonds, as the economy improved, the long-term diamond supply will be assured that this will future prices of diamonds to lay a good foundation. "