RAPAPORT... Rio Tinto's first-half results found that diamond sales fell 4 percent year on year to $313 million and the segment reported a loss of $10 million compared with a profit of $34 million one year ago. Diamond production fell 26 percent to 5.23 million carats.
Gross sales, for all business units of Rio Tinto, performed very well and totaled $31.76 billion, an increase of 31 percent. Company profit rose 30 percent to $7.59 billion.
Vivek Tulpulé, Rio Tinto's chief economist, wrote that diamond markets "saw a swift recovery" during the first half of 2011. "Strong demand for larger stones from China coupled with smaller stone demand from India as well as financial crisis driven supply curtailments have driven a strong price recovery for both rough and polished prices.'' Tulpule added that average rough diamond price growth has outpaced polished price growth where rough prices have almost tripled from their April 2009 low.
Rio Tinto expects relatively strong global economic growth, which would support robust diamond demand, and Tulpule confirmed that diamond markets remain buoyant.
Additionally, Tulpule stated, ''Our research suggests that the threat to demand from synthetic diamonds is low. The U.S. remains the largest consumer of diamonds accounting for over 40 percent of demand, however with double digit growth from both the Far East and India, combined these markets could soon rival the U.S."
Rio Tinto chairman, Jan du Plessis, said of the overall results, ''Rio Tinto has produced another set of record-breaking results. Market conditions have remained favorable over the past six months due to strong Asian demand, although the volatile economic environment that we highlighted eighteen months ago continues to exist, driven by significant macro economic imbalances.''
Tom Albanese, Rio Tinto's chief executive, said, ''Market expectations are for global growth of around 3.5 percent this year and we expect Chinese GDP to expand by 9.5 percent. We remain positive for the remainder of 2011 and into 2012, in particular given the context of the industry struggling to bring new production on-stream. However there are important risks to this outlook related to the pace of credit tightening in developing countries and the threat of financial crises arising from sovereign debt problems in Europe and the United States which could destabilize commodity markets.''