Industry News
De Beers feels the pinch
16/01/2009
Low demand for diamonds leads to 1400 job cuts
Kea’ Modimoeng
DIAMOND mining giant De Beers plans to lay off a third of its local workforce as stocks in excess of 300-million (R3-billion) carried forward from last year limit its production needs this year.
In a January 13 document, “Response to Global Economic Situation”, which Business Times has seen, the world’s biggest diamond company says: “DBCM [De Beers Consolidated Mines] is contemplating reducing 1415 positions, including vacancies.”
This number translates to 1000 manned positions and the rest are posts that are yet to be filled.
Tom Tweedy, spokesman for De Beers, yesterday denied that there were any planned retrenchments.
Tweedy confirmed that De Beers employs about 3500 workers in its local operations, and said: “At this point there are no retrenchments.”
The downturn in the industry has hit some leading diamond companies that were once riding high on the luxury boom in markets such as China, Russia and India. And with the US — which buys about 45percent of the world’s diamonds — facing a recession amid a record low in consumer confidence levels, the drop in demand for diamonds is set to continue to raise red flags in the industry.
The De Beers document states that the company has “experienced a dramatic slowdown in sales” with sale refusals of 80- million between September and last month as orders for rough diamonds dwindled.
Prices for polished diamonds have dropped 13percent since reaching a peak in August, according to independent news and price list provider to the diamond industry, PolishedPrices. An industry insider told Business Times yesterday that diamond prices could drop by between 50 and 60percent this year. He said: “I can confirm that the drop in the price of diamonds will certainly be more than 30 percent.
This week, miningmx.com quoted Des Kilalea, an analyst at international corporate and investment bank RBC Capital Markets, as saying: “I wouldn’t be surprised if prices drop by more than 30percent. There will be no material recovery in 2009.
“De Beers is going to be hurt the most, since it mines the most diamonds.” — Additional reporting by Reuters
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