Loss-making De Beers cautious about future

TOP diamond producer De Beers is cautious about the recovery in hard-hit luxury goods markets and will only slowly ramp up production after swinging to an annual loss and having to raise $1 billion (£640 million) from shareholders to cut debt.

The group, 45 per cent owned by miner Anglo American, yesterday said rough or unpolished diamond prices had shown a strong rebound since the depths of the global recession, but the future was uncertain after its slashed output by half last year.

"With the fragility of the world economy and perceived weakness of the global recovery post recession, the company would only expect a gradual increase in production levels, sales and prices," it noted.

Anglo and two other shareholders confirmed they will pump more cash into the company after it was forced to shut mines last year during the downturn.

The group said in December that Anglo, South Africa's Oppenheimer family with a 40 per cent stake and the Botswana government with the remaining 15 per cent, had agreed to a rights issue of up to $1bn to cut debt.

All the proceeds would be used to cut the group's net debt to around $2bn.