Diamonds
Leading the world in diamond production
De Beers is the largest producer and marketer of gem diamonds by value in the world. Its expertise extends to all aspects of the diamond industry, including prospecting, mining and recovery and, through the Diamond Trading Company (DTC), sorting, valuing and the sale of rough gem diamonds. $)!-/.$3
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OVERVIEW %")4$! /PERATING PROäT
• $E "EERS IS A GLOBAL LEADER IN THE WORLD DIAMOND INDUSTRY • 'LOBAL RETAIL SALES CONTINUE TO RISE $541m $463m • $E "EERS GROUP DIAMOND PRODUCTION SURPASSES MILLION CARATS • 5PCOMING PROJECTS WILL ADD MILLION CARATS TO $E "EERSÓ ANNUAL PRODUCTION $655m $583m CAPACITY
Business overview $E "EERS IS THE WORLDÓS LEADING DIAMOND EXPLORATION MINING Ownership structure AND MARKETING COMPANY )TS EXPERTISE EXTENDS TO ALL ASPECTS Anglo American Central Holdings Government of OF THE DIAMOND PIPELINE INCLUDING PROSPECTING MINING AND Group Group Botswana RECOVERY AND THROUGH ITS MARKETING ARM THE ,ONDON BASED $IAMOND 4RADING #OMPANY $4# THE SORTING VALUING AND 45%40% 15% SALE OF ROUGH GEM DIAMONDS $E "EERS PRODUCES AROUND BY VALUE OF TOTAL ANNUAL GLOBAL DIAMOND PRODUCTION FROM ITS MINES IN 3OUTH !FRICA AND THROUGH ITS PARTNERSHIPS WITH THE GOVERNMENTS OF "OTSWANA .AMIBIA AND 4ANZANIA 4HROUGH THE $4# $E "EERS MARKETS AROUND OF THE DB Investments (Lux)
WORLDÓS DIAMONDS AND HAS CONDUCTED A RENOWNED DIAMOND 100% ADVERTISING CAMPAIGN BASED ON ITS FAMOUS ADVERTISING PROMISE ! DIAMOND IS FOREVER FOR OVER HALF A CENTURY De Beers sa (Lux) $E "EERS AND -O¦T (ENNESSY ,OUIS 6UITTON HAVE ESTABLISHED A HIGH END RETAIL JEWELLERY JOINT VENTURE THROUGH $E "EERS $IAMOND *EWELLERS WITH STORES IN THE LEADING MALLS AROUND 50% 50% 75% 74% 100% THE WORLD Debswana Namdeb Williamson De Beers Diamond !NGLO !MERICANÓS DIAMOND INTERESTS ARE REPRESENTED BY ITS (Botswana) (Namibia) (Tanzania) Consolidated Trading SHAREHOLDING IN $E "EERS )NVESTMENTS $") 4HE OTHER Mines Company (South Africa) (UK) SHAREHOLDERS ARE #ENTRAL (OLDINGS ,IMITED AN /PPENHEIMER FAMILY HOLDING COMPANY AND THE "OTSWANA GOVERNMENT $") IS THE OWNER OF $E "EERS SA
$E "EERS SA HAS A INTEREST IN EACH OF $EBSWANA $IAMOND #OMPANY 0ROPRIETARY ,IMITED AND .AMDEB $IAMOND #ORPORATION 0ROPRIETARY ,IMITED OWNED JOINTLY WITH THE GOVERNMENTS OF "OTSWANA AND .AMIBIA RESPECTIVELY A INTEREST IN 7ILLIAMSON $IAMONDS 4ANZANIA A INTEREST IN $E "EERS #ONSOLIDATED -INES ,IMITED 0ONAHALO )NVESTMENTS ACQUIRED A INDIRECT INTEREST IN $E "EERS #ONSOLIDATED -INES IN !PRIL AND OWNS OF THE NON 3OUTH !FRICAN ELEMENTS OF THE $4#
0REVIOUS PAGE #LOSE UP OF DIAMONDS )N THE $E "EERS GROUP ACHIEVED ITS HIGHEST EVER PRODUCTION OF MILLION CARATS
28 \ !NGLO !MERICAN PLC &ACT "OOK Industry overview and demand drivers Exploration 4HE DIAMOND INDUSTRY CAN BROADLY BE SEPARATED INTO TWO $E "EERS IS CONDUCTING FOCUSED EXPLORATION IN AREAS OF MARKETS ONE DEALING IN GEM QUALITY ROUGH DIAMONDS BY FAR HIGHEST POTENTIAL IN ORDER TO ADD VALUE TO THE $E "EERS &AMILY THE MORE IMPORTANT OF THE TWO AND THE OTHER DEALING WITH OF #OMPANIES AND SHAREHOLDERS BY DELIVERING NEW PROäTABLE INDUSTRIAL QUALITY DIAMONDS 'EM GRADE DIAMONDS ARE SOLD FOR CARAT PRODUCTION USE IN JEWELLERY AND VALUED FOR THEIR SIZE SHAPE COLOUR AND CLARITY 3OME NATURAL STONES ARE USED FOR INDUSTRIAL PURPOSES .ORTH !MERICA SUCH AS CUTTING DRILLING AND OTHER APPLICATIONS OF $E "EERS IS CONDUCTING EXPLORATION ACTIVITIES IN #ANADA WITHIN DIAMOND MATERIAL USED IN INDUSTRIAL APPLICATIONS IS SYNTHETIC THE .ORTHWEST 4ERRITORIES .ANAVUT 3ASKATCHEWAN -ANITOBA /NTARIO AND 1UEBEC 2OUGHLY OF THE WORLDÓS DIAMONDS BY VALUE ORIGINATE FROM SOUTHERN AND CENTRAL !FRICA ALTHOUGH SIGNIäCANT SOURCES 3OUTHERN !FRICA OF THE MINERAL HAVE BEEN DISCOVERED IN #ANADA 2USSIA AND %XPLORATION CONTINUES IN 3OUTH !FRICA "OTSWANA AND IN !USTRALIA !PPROXIMATELY MILLION CARATS OF DIAMONDS ARE CONJUNCTION WITH .AMDEB IN .AMIBIA "OTSWANA CONTINUES TO MINED EACH YEAR AND WHILE THE VAST MAJORITY OF NATURAL YIELD INTERESTING RESULTS PARTICULARLY IN THE AREA SURROUNDING DIAMOND PRODUCTION BY VALUE IS GEM QUALITY APPROXIMATELY THE /RAPA MINE OF MINED DIAMONDS BY WEIGHT ARE UNSUITABLE FOR USE IN JEWELLERY AND ARE DESTINED FOR INDUSTRIAL USE #ENTRAL !FRICA %ARLY STAGE EXPLORATION IS TAKING PLACE IN HIGHLY PROSPECTIVE Strategy PARTS OF !NGOLA AND THE $EMOCRATIC 2EPUBLIC OF #ONGO $E "EERS AIMS TO BE THE PARTNER OF CHOICE IN THE DIAMOND INDUSTRY %ASTERN %UROPE $E "EERS IS STEADILY INCREASING ITS EXPLORATION ACTIVITIES AND 5PSTREAM TECHNICAL COLLABORATION WITHIN 2USSIA AND 5KRAINE AND HAS • DEVELOPMENT OF TWO NEW MINES IN #ANADA 3NAP ,AKE AND SIGNED A -EMORANDUM OF 5NDERSTANDING WITH !LROSA 6ICTOR TO ENTER PRODUCTION IN LATE AND AT THE END OF 2USSIAÓS LEADING DIAMOND PRODUCER RESPECTIVELY • REOPENING OF ITS LONG DORMANT 6OORSPOED MINE IN 3OUTH !SIA !FRICA )N )NDIA EXPLORATION IS UNDER WAY IN +ARNATAKA !NDHRA • INCREASING ITS MARINE MINING OPERATIONS OFF 3OUTH !FRICAÓS 0RADESH /RISSA -ADHYA 0RADESH 5TTAR 0RADESH AND !TLANTIC COAST #HATTISGARH WITH ENCOURAGING RESULTS
$OWNSTREAM !S A RESULT OF THE REFOCUS EXERCISE ACTIVE EXPLORATION • THE $4# CONTINUES TO SUCCESSFULLY ADDRESS THE CHALLENGES OPERATIONS HAVE RECENTLY CEASED IN "RAZIL #ENTRAL !FRICAN OF DRIVING CONSUMER DEMAND THROUGH ITS SALES AND 2EPUBLIC 'ABON :IMBABWE AND 'UINEA MARKETING STRATEGY 3UPPLIER OF #HOICE • GLOBAL RETAIL SALES ARE ESTIMATED TO HAVE EXCEEDED BILLION IN AND WERE BOLSTERED BY AN INCREASE IN ADVERTISING PROGRAMMES BY $4#ÓS CLIENTS AND ITS DOWNSTREAM TRADE PARTNERS AS WELL AS THE $4#ÓS OWN MARKETING INITIATIVES • THE $4# HAS A GLOBAL SPEND OF MORE THAN MILLION EACH YEAR ON RESEARCH TO DEVELOP FURTHER ITS CONSUMER UNDERSTANDING ON A MARKET BY MARKET BASIS
4HE FOUR #S 4HE CHARACTERISTICS WHICH GIVE THE DIAMOND ITS QUALITY AND VALUE ARE #UT #OLOUR #LARITY AND #ARAT WEIGHT
#UT #LARITY ! DIAMONDÓS CUT IS WHAT GIVES IT -OST DIAMONDS CONTAIN TINY INCLUSIONS SPARKLE AND äRE 4HE BETTER THE NOT DISCERNIBLE TO THE NAKED EYE 4HE PROPORTIONS THE BETTER THE DIAMOND FEWER AND SMALLER THEY ARE THE LESS LIKELY IS ABLE TO HANDLE LIGHT CREATING MORE THEY ARE TO INTERFERE WITH THE PASSAGE OF SPARKLE AND SCINTILLATION LIGHT THROUGH THE DIAMOND AND THEREFORE THE MORE RARE AND BEAUTIFUL IT WILL BE
#OLOUR #ARAT WEIGHT 4HE MAJORITY OF DIAMONDS RANGE FROM /NE CARAT IS DIVIDED INTO ÒPOINTSÓ THOSE WITH BARELY PERCEPTIBLE YELLOW SO THAT A DIAMOND OF POINTS WEIGHS AND BROWNISH TINTS UP TO THE VERY RARE CARATS CARAT GRAMS 4WO PINKS BLUE AND GREENS WHICH ARE KNOWN DIAMONDS OF EQUAL WEIGHT CAN THEREFORE AS ÒFANCIESÓ 4HE BEST ÒCOLOURÓ FOR A HAVE VERY DIFFERENT VALUES DEPENDING DIAMOND IS HOWEVER ÒCOLOURLESSÓ ON THEIR CUT CLARITY AND COLOUR
!NGLO !MERICAN PLC &ACT "OOK \ 29 $)!-/.$3
!2/5.$ 4(% 7/2,$
+EY M 5NDERGROUND M /PEN #UT /THER
"OTSWANA .AMIBIA M /RAPA $E "EERS -ARINE .AMIBIA M *WANENG M .AMDEB 4 M ,ETLHAKANE 1 $AMTSHAA 1 3 M 2 2
)N $E "EERS WITH ITS PRINCIPAL PARTNERS $EBSWANA .AMDEB A PARTNERSHIP BETWEEN $E "EERS AND AND .AMDEB PRODUCED MILLION CARATS OF ROUGH THE .AMIBIAN 'OVERNMENT HISTORICALLY HAS BEEN A DIAMONDS 4HE MAIN COMPONENT OF THIS OUTPUT WAS SOURCE OF HIGH VALUE GEMSTONES 4ODAY IT IS THE $EBSWANA WHICH OPERATES TWO OF THE WORLDÓS GREAT ACKNOWLEDGED LEADER IN MARINE RECOVERY OF DIAMONDS DIAMOND MINES *WANENG AND /RAPA )N $EBSWANA WITH APPROXIMATELY HALF OF ITS ANNUAL PRODUCTION OF PRODUCED A RECORD MILLION CARATS AN INCREASE OF MILLION CARATS COMING FROM MARINE MINING AT DEPTHS OVER OF DOWN TO METRES IN THE !TLANTIC /CEAN OFF .AMIBIA )N .AMDEBÓS PRODUCTION OF MILLION CARATS INCLUDED MARINE PRODUCTION OF MILLION CARATS
3OUTH !FRICA 5NITED +INGDOM)RELAND $E "EERS -ARINE Ð %LEMENT 3IX )RELAND M &INSCH Ð $E "EERS $IAMOND *EWELLERS +IMBERLEY $4# 5+ 6 M .AMAQUALAND 7 M #ULLINAN 1 5 3 M 4HE /AKS 4 3 2 M 6ENETIA 2 1
$E "EERSÓ 3OUTH !FRICAN MINES PRODUCED A TOTAL OF $URING OUR INDEPENDENTLY MANAGED RETAIL JOINT MILLION CARATS IN A DROP OF MILLION CARATS ON VENTURE WITH ,OUIS 6UITTON -OET (ENNESSY ,6-( 4HE DROP WAS DUE MAINLY TO THE CLOSURE OF $E "EERS $IAMOND *EWELLERS $"$* FORMERLY KNOWN AS +OFäEFONTEIN AS WELL AS A REDUCED BUDGET PRODUCTION $E "EERS ,6 ACHIEVED RECORD SALES IN EXCESS OF 53 OF #ULLINAN MINE MILLION $"$* OPENED äVE STORES IN +OBE ,ONDON (ARRODS +YOTO $UBAI 4AIPEI AND ON *ANUARY $"$* OPENED A FURTHER OUTLET IN ,AS 6EGAS BRINGING THE TOTAL TO STORES GLOBALLY 3ALES ARE BECOMING INCREASINGLY BALANCED ACROSS THE GLOBAL $"$* STABLE WITH THE 5NITED +INGDOM TOTALLING *APAN AND THE 5NITED 3TATES
%LEMENT 3IX THE INDEPENDENTLY MANAGED DIAMOND GROUP RECORDED A STRONG YEAR IN WITH SALES INCREASING AND A GREATLY IMPROVED CONTRIBUTION TO $E "EERS EARNINGS
30 \ !NGLO !MERICAN PLC &ACT "OOK &).!.#)!, ()'(,)'(43
3IX YEAR UNDERLYING EARNINGS Scale and profitability growth M bubble size represents production carats 30
27 24 2000 21 18 15 2006 12
Operating margin % 9 6 3 0 0150300 450 600750 900 1050 1200 Operating profit $m
/PERATING MARGIN 2006 De Beers mine production by region %
0.4 Botswana 4.1 South Africa Namibia Tanzania 28.5
67.1
Total: 51.1m carats
#ASH GENERATION FROM OPERATING ACTIVITIES $E "EERS MINE PRODUCTION FROM Ð ON A BASIS TOTAL CARATS $"#- $EBSWANA .AMDEB AND 7ILLIAMSON
.ET INTEREST BEARING DEBT
( &9 ( &9 ( &9 ( &9 !NGLO !MERICAN PLC &ACT "OOK \ 31 $)!-/.$3
&).!.#)!, $!4!
4URNOVER 53 MILLION 3UBSIDIARIES Ð Ð Ð Ð Ð Ð *OINT 6ENTURES Ð Ð Ð Ð Ð Ð !SSOCIATES 4OTAL TURNOVER %")4$! $EPRECIATION AND AMORTISATION /PERATING PROäT BEFORE SPECIAL ITEMS AND REMEASUREMENTS /PERATING SPECIAL ITEMS AND REMEASUREMENTS Ð Ð Ð Ð /PERATING PROäT AFTER SPECIAL ITEMS AND REMEASUREMENTS .ET INTEREST TAX AND MINORITY INTERESTS 4OTAL UNDERLYING EARNINGS 'ROUPÓS SHARE OF NET ASSETS Ð Ð #APITAL EXPENDITURE Ð Ð Ð Ð Ð Ð
32 \ !NGLO !MERICAN PLC &ACT "OOK $)!-/.$3 2%#/6%2%$
South Africa
#ARAT #ULLINAN &INSCH -INE +IMBERLEY +OFäEFONTEIN .AMAQUALAND 4HE /AKS 6ENETIA 4OTAL
Botswana
#ARAT $EBSWANA OWNED BY $E "EERS /RAPA ,ETLHAKANE *WANENG $AMTSHAA Ð 4OTAL Namibia
#ARAT
.AMDEB OWNED BY $E "EERS $IAMOND !REA -ARINE -INING 4OTAL Tanzania
#ARAT
7ILLIAMSON 4OTAL
'RAND TOTAL
!NGLO !MERICAN PLC &ACT "OOK \ 33 $)!-/.$3
$)!-/.$3 '2!$%
South Africa
#ARAT METRIC TONS #ULLINAN &INSCH -INE +IMBERLEY +OFäEFONTEIN .AMAQUALAND 4HE /AKS 6ENETIA 4OTAL WEIGHTED AVERAGE Botswana
#ARAT METRIC TONS $EBSWANA OWNED BY $E "EERS /RAPA ,ETLHAKANE *WANENG $AMTSHAA Ð 4OTAL WEIGHTED AVERAGE Namibia
#ARAT METRIC TONS .AMDEB OWNED BY $E "EERS $IAMOND !REA -ARINE -INING NA NA NA Ð 4OTAL WEIGHTED AVERAGE NA NA Tanzania
#ARAT METRIC TONS 7ILLIAMSON 4OTAL WEIGHTED AVERAGE 'RAND 4OTAL WEIGHTED AVERAGE
2ECOVERED 'RADE REPRESENTED AS CARATS RECOVERED PER M AND NOT CARATS RECOVERED PER HUNDRED METRIC TONS
34 \ !NGLO !MERICAN PLC &ACT "OOK 02/*%#4 0)0%,).%
1
4 2 3
1. Snap Lake 3. De Beers Marine #ANADA 3OUTH !FRICAN 3EA !REAS
/WNERSHIP $E "EERS /WNERSHIP $E "EERS #ONSOLIDATED -INES )NCREMENTAL PRODUCTION M CARATS OVER LIFE OF PROJECT)NCREMENTAL PRODUCTION M CARATS OVER LIFE OF PROJECT &ULL PROJECT CAPEX M &ULL PROJECT CAPEX M &ULL PRODUCTION &ULL PRODUCTION 4HE 3NAP ,AKE PROJECT IN THE .ORTHWEST 4ERRITORIES IS ON TARGET TO START PRODUCTION 4HIS PROJECT WILL ESTABLISH A FULL SCALE MINING IN /CTOBER OPERATIONAL IN THE -, CONCESSION AREA OFF THE 3OUTH !FRICAN WEST COAST 5NCONSOLIDATED 2. Victor DIAMONDIFEROUS GRAVELS WILL BE RECOVERED FROM #ANADA THE SEABED AT DEPTHS BETWEEN M AND M AND PROCESSED ONBOARD A MINING VESSEL 4HE LATTER /WNERSHIP $E "EERS IS CURRENTLY UNDERGOING COMMISSION AND WILL )NCREMENTAL PRODUCTION M CARATS OVER COMMENCE OPERATIONS IN THE THIRD QUARTER OF LIFE OF PROJECT 4. Voorspoed &ULL PROJECT CAPEX M 3OUTH !FRICA &ULL PRODUCTION /WNERSHIP $E "EERS #ONSOLIDATED -INES 4HE 6ICTOR MINE IN /NTARIO IS SCHEDULED TO COME ON STREAM IN THE LAST QUARTER OF )NCREMENTAL PRODUCTION M CARATS OVER LIFE OF PROJECT
&ULL PROJECT CAPEX M
&ULL PRODUCTION
4HIS PROJECT WILL ESTABLISH A 'REENäELD OPEN PIT DIAMOND MINING OPERATION IN THE /RANGE &REE 3TATE FOR $E "EERS #ONSOLIDATED -INES ,IMITED WITH AN EXPECTED LIFE OF MINE OF YEARS 4HE OPERATION WILL EXTRACT AND PROCESS THE +IMBERLITE ORE AT A RATE OF -TPA ON A CONTINUOUS OPERATIONS BASIS USING CONVENTIONAL ORE EXTRACTION AND ORE PROCESSING TECHNOLOGY AND METHODOLOGIES
!NGLO !MERICAN PLC &ACT "OOK \ 35 Diamonds
market information
2006 world mine production 2006 global demand for retail diamond jewellery carats % % 0.7 2.4 1.4 0.2 ● Botswana ● US 5.5 5.2 6.5 22.4 ● Australia ● Other 8.7 ● Russia ● Japan ● D.R. Congo 8.1 ● Europe ● South Africa ● Asia-Arabia 9.9 ● Canada 49.1 ● Asia-Pacific ● Angola 15.1 19.2 ● Others ● Namibia 14.5 ● Ghana ● C.A.R 15.9 15 Note: Europe = France and Italy only Asia Pacific = China, Hong Kong, Taiwan Source: De Beers Source: De Beers 2006 split of diamond jewellery retail market by sales % US 49.10
Rest of world 15.90 Japan 15.10
Italy 5.60
India 3.0 France 2.50 China 2.40
Gulf 2.40 Taiwan 1.80
Turkey 1.10
Hong Kong 1.0
Source: De Beers
36 | Anglo American plc Fact Book 2006/7