De Beers reported record sales in the first half of 2011 as rough diamond prices grew by about 35 percent during the period.

''This is the highest ever sales figure recorded for the first half of the year, buoyed by continued retail demand from the Indian and Chinese consumer markets and stronger than expected demand in America,'' the company stated.

Group sales increased 30 percent year on year to $3.89 billion during the six months that ended on June 30, 2011, while sales of rough diamonds through the Diamond Trading Company (DTC) grew 33 percent to $3.5 billion. Net earnings rose 72 percent to $694 million and earnings before interest, taxation, depreciation and amortization (EBITDA) grew 55 percent to $1.18 billion. Cost of sales increased by 26 percent to $3.07 billion while operating costs, including exploration, marketing and technical services, fell 10 percent to $200 million.

De Beers production remained stable at 15.534 million carats during the six months, reflecting the impact of maintenance, asset management difficulties and heavy rainfall in southern Africa. The bulk of production came from the company’s Debswana subsidiary in Botswana where output increased by 10 percent to 11.320 million carats. De Beers South Africa production fell 22 percent to 2.798 million carats, while in Canada output grew 4 percent to 817,000 carats and its Namibia production dropped by 25 percent to 599,000 carats.

De Beers noted continued growth in its downstream activities as it expands the Forevermark brand in the Far East, India and the Caribbean with a small number of U.S. stores currently carrying the brand. A full U.S. Forevermark expansion is planned for the second half of the year. De Beers Diamond Jewellers (DBDJ) launched in China during the first half and will focus its expansion on the Far East. The performance at Element Six, the industrial and synthetic diamond subsidiary, was impacted by operational challenges and a weaker dollar, but posted a “good first half performance in respect of both sales and profitability,” De Beers reported.

The company stressed it is confident that growth in India and Asia will continue to drive demand for diamonds despite the ongoing global economic risk. “We are encouraged by the continued strong growth in price and demand during the first six months of 2011,” De Beers stated. “Reports from the recent JCK Vegas trade show indicate that the all-important Christmas season in the U.S., and Diwali, are set to be strong.”

De Beers did not announce details of its anticipated new marketing agreement with the Botswana government governing its Debswana production. Management told Rapaport News an agreement is expected in the coming month, which should reflect a fair deal and would not impact future supply to sightholders.