De Beers leading $400m marketing strategy
July 26, 2004
By Nicky Smith
Johannesburg - De Beers, the biggest diamond miner, and its partners in the "supplier of choice" marketing strategy will spend $400 million (R2.48 billion) this year selling the idea that diamonds are rare and signify such things as fidelity.
In 2003 De Beers' marketing arm, the Diamond Trading Company, spent $180 million on marketing while its partners spent $272 million on high-quality marketing aimed at stimulating demand while keeping prices high.
Gary Ralfe, the managing director of De Beers, said on Friday at the release of interim results that Japan, one of the company's most important markets, had shown its first signs of growth in 10 years, expanding by between 1 percent and 2 percent.
The group recorded double-digit growth in China and Hong Kong and sales in the UK and France were also healthy.
The company remained concerned about its South African operations, where five out of its seven mines were making operating losses at the current rand/dollar levels.
Ralfe said the company would prefer voluntary retrenchments before it started firing people or closing mines. Once a mine was closed, he said, it would not open again.
On a brighter note, recoveries from dumps at the Kimberley mine were yielding 2 million carats a year.
The company said it was talking with the Angolan state-owned diamond mining firm Endiama and the Angolan government to secure its return to one of the world's most diamond-rich countries.
"Our geologists would dearly love to return to the country," Ralfe said.
It now had permits to start with its Canadian Snap Lake project.
"We should be able to proceed with the construction of the mine," Ralfe said, adding the company would be producing about $500 million worth of diamonds out of Canada by 2010.
De Beers pleaded guilty to charges of price fixing industrial diamonds in the US recently and paid a $10 million fine.
The company said it believed it was legally compliant on both the industrial and gem side of its business, but no explicit guidance has been given to the company by the US department of justice to this effect.
De Beers said it was in no rush to get back to the US.
AI
