De Beers Teleconference: The Highlights

There was nothing earth-shaking but some interesting remarks in the latest De Beers teleconference following the release of its financial results:

-         Gareth Penny said that “Journey diamond jewelry” accounted “for ten percent of sales at independent and small chain retailers” in the United States. But he added “the picture is for modest growth in the U.S.” He also expressed optimism about the De Beers retail chain, noting sales were up (which one would expect, since the number of stores are up.)
Regarding the state of the market, he said, “Prices have been coming back. We have been able to put prices back up again in recent sights. Debt levels are high but what we are pleased about is that rough and polished stocks seem to be coming down and in due course we expect that will lead to debt coming down.”

 

-         Nicky Oppenheimer on the furor over the remarks by his son Jonathan: “It’s always disappointing when a journalist takes a single line out of a 45 minute presentation and builds a story around that .. Anyone who was there would have known that in the body of his talk Jonathan made it absolutely clear  that De Beers  is fully supportive of southern African governments’ drive for beneficiation. I think we all understand that perfectly well …

“Jonathan also made the point there is a cost differential between polishing diamonds in Southern Africa and say, India, which is the lowest cost producer. It is a simple fact, well known to us and all the governments in the region. If we are to have a successful drive to beneficiation in Southern Africa both De Beers and the governments in the region will have to do what we can to mitigate that problem …”

 

-         Gareth Penny on the appeals court voiding the E.C. ruling on Alrosa: “We will be examining the full judgment of the court. It is far too early to see the impact.”

 

-         On the issue of how many sightholders there will be, Penny said, “We have to satisfy all the commitments we have made in producer countries … but it is too early to tell.”  (Again!)

 

-         He also said the company’s London headquarters “will continue to be an important, albeit smaller, part of the company’s business in the future.”

JCK News Director