De Beers diamond division becoming Anglo American's crown jewel

Fri Feb 13, 2015 2:51pm EST
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By Silvia Antonioli

LONDON Feb 13 (Reuters) - Diamond company De Beers, once a niche business for global miner Anglo American, is rapidly rising to become the jewel in its crown - with a brighter outlook than many of its metals.

The division's profit leapt by more than a third in 2014 at the same time as its parent company Anglo saw earnings drop by about a quarter, hammered by a dive in prices of metals such as iron, copper and coal.

It overtook copper last year to become the second-largest contributor to group profit, fast closing the gap with the flagship iron ore business.

De Beers increased production in 2014 to capitalise on diamond prices having risen over the previous five years, and at the same time managed to marginally lower production costs at its mines in southern Africa and Canada.

Profit at the division, which sells its diamonds in dollars, was also boosted by the decline of southern African and Canadian currencies against the U.S. unit.

Global polished diamond sales rose an estimated 4 percent to about $26 billion last year, according to De Beers, and its Chief Financial Officer Gareth Mostyn expects the figure to rise by 3-4 percent in 2015.

"The fact that we performed well in 2014, a year that has been difficult for many of Anglo's other businesses because of (weak) commodity prices really is a testament to the diversified business model that Anglo has," he told Reuters in an interview.

"I hope those other commodities start to do better," he said. "We are focused on continuing to deliver the current performance."   Continued...