De Beers sees 'reasonable' 2007 with robust market

The global diamond market has proved robust in the face of a credit crisis and rough prices have held up, the managing director of De Beers, the world's largest producer said on October 16.
"The market has been pretty robust through the second half of this year and we certainly haven't seen price declines," Gareth Penny told Reuters television in an interview. "I think the market looks in reasonable shape," he said in comments at the sidelines of the Antwerp Diamond Conference.
De Beers, 45 percent owned by mining group Anglo American Plc, was receiving positive feedback from retailers in India and China. The American market to date had also been respectable.
The United States accounts for about half of the retail diamond jewellery market and there are concerns about the health of the economy, particularly heading into the key Christmas season.
Penny said the credit crunch had not affected the rough diamond market. The jury was still out regarding the US retail market as the vital fourth quarter had only just begun. "I don't think we've seen a discernible impact, but we will have to wait and see the results through to Christmas," he said. Overall, Penny said De Beers was looking set to have a "reasonable" year, although he cautioned against making year-on-year comparisons.
Sales in the first half dropped 8 percent to $2.99 billion due in part to reduced Russian material.
"You are not comparing apples with apples and that will continue through in the second half of this year," Penny said. De Beers settled a monopoly case with the European Union by agreeing to stop trade with Russia's Alrosa, the world's second largest producer, by 2009, although a European court lifted the curbs in a decision in July. The two miners account for around three-quarters of world production.
De Beers planned to cut its trade with Alrosa by $100 million to $500 million this year and to $400 million in 2008. Penny said that it was too early to say whether that strategy would change in the light of the court's ruling.
"For the moment we are in a wait and see mode. Clearly there is discussion going on between the European Commission and the court of first instance and so on. And De Beers will await that result."