JOHANNESBURG (miningweekly.com) – As diamond producer De Beers ended the year to December on a more positive note, the Anglo American subsidiary remained optimistic of a strengthening industry as the global economic outlook improved.

De Beers achieved an operating profit of $1-billion during the year to December – a 112% jump on the $474-million delivered in 2012 – on the back of Anglo’s increased shareholding in the diamond producer and a more than 35% improvement in the underlying results of the business.

Underlying earnings before interest, tax, depreciation and amortisation rose to $1.5-billion, up from $712-million the year before, while the company had also bolstered capital expenditure from $161-million in 2012 to $551-million during the year under review.

CEO Philippe Mellier said the underlying improvement reflected higher sales revenues and tighter cost control, which benefitted from favourable exchange rate movements.

De Beers’ full-year production edged up 12% to 31.2-million carats, with improvements reported across all regions, particularly in Botswana and Canada.

Sales for the year lifted marginally to $6.4-billion from $6.1-billion in 2012.

A combination of weaker polished prices, high levels of stock in the cutting centres and tightening liquidity had offset the first half of the year’s rise in prices; however, the price decrease, together with an increase in polished sales, saw the rough market stabilise and start to improve toward the end of the year.

Since the start of the year, De Beers’ rough diamond price index increased 2%, while average realised rough diamond prices were 5% higher.

“Despite global macroeconomic uncertainty, diamond jewellery sales increased in local currency terms in all major diamond markets, except India, where challenging economic conditions and a devaluation of the rupee resulted in a decline in demand,” Mellier said.

He added that continued gradual improvements in the global economic outlook would slightly strengthen growth in diamond jewellery demand in 2014.

“The US and China are expected to continue to be the main engines of growth for polished diamonds, while most other markets are expected to show positive growth in local currency, with final dollar denominated results being partly dependent on currency fluctuations,” Mellier explained.

However, rough diamond manufacturers, in India in particular, faced continued pressures regarding levels of bank financing, while further volatility of the rupee could potentially affect rough diamond sales.

“In the medium to long term, industry fundamentals are expected to strengthen as diamond production plateaus and demand continues to increase,” Mellier concluded.