De Beers sees output at Venetia mine back to normal in second half

By Siddesh Mayenkar

MUMBAI (Reuters) - De Beers, a unit of miner Anglo American, said production at its Venetia diamond mine, the biggest in South Africa, should return to normal in the second half of 2013, keeping its production steady at 2012 levels.

The company produced 4 million carats of diamonds in South Africa last year, of which 3 million carats were mined from Venetia. In February, the company invested $2.27 billion in the mine, which will extend the life of the mine until 2042 but production has been disrupted by heavy rainfall.

"South Africa had the worst rain in the last 200 years and our big mine Venetia had 23 metres of water, so therefore our production was slightly lower," Varda Shine, chief executive officer of Diamond Trading Company (DTC), the sales and distribution arm of De Beers, told Reuters.

The company produced a total of 27.9 million carats in 2012 from its mines in Botswana, South Africa and Canada, controlling around 40 percent of the global rough diamond market.

De Beers' total sales fell 16 percent to $6.1 billion in 2012. Core earnings dropped 39 percent to $1.08 billion.

The company said its diamond sales in the first quarter of 2013 were "slightly better" than last year, driven by Chinese New Year and a revival in demand in the United States.

It forecasts a single-digit increase in rough diamond prices this year, after a 12 percent fall in 2012.

"Over the last 20 years no new big (diamond) mine has been discovered, we have also seen the emergence of Asian markets like China and India," said Shine, referring to reasons for its bullish price outlook.

(Editing by Susan Fenton)