De Beers to cut production, jobs and spending

"In the first half of 2009, we will reduce production across our mining portfolio and adjust that as we go based on client demand," director of communications, David Prager, told the news agency. Mr Prager added that the company has begun consultation on job losses in Botswana, South Africa, Namibia, Canada and also the head office in London.
Job cuts in South Africa will be limited to below 1,000, he added. The group currently has 3,500 workers in the country.

Mr Prager also said that De Beers is planning to reduce the volume of diamonds it will offer at upcoming DTC sales events after a "significantly smaller" sight in December.

Meanwhile, prices of De Beers' rough diamonds in the second half of 2008 have reportedly gone back to the level reached during the start of 2008. In August 2008, De Beers said rough prices have risen 16 percent at that point. Prices of rough from other producers, by comparison, dropped 50 percent.

De Beers' decision to cut output is expected to exacerbate the shortage of diamonds in the future, Mr Prager noted. "It is likely there will be a shortfall created in the medium term… there are fewer diamond reserves and no major mines have been discovered in the last decade," he was quoted as saying.

Diamonds here to stay
He described diamond jewellery sales during the holiday season as "within expectations." "Most sectors are experiencing a decline in sales; luxury products, including diamonds, are not immune," he said. He added however that the special niche of diamonds provides a strong foundation for the segment. "There is a base level of demand through which diamonds will not fall. People still get engaged, get married, have anniversaries. This is key factor of resiliency," he noted.