De Beers Diamonds FINAL.ppt · 2 PROGRAMME 12.30-13.00 Sandwich lunch 6th floor dining room 13.00-15.00 Investor & Analyst presentation 6th floor boardroom 15.00-16.00 De Beers Diamond

DIAMONDS BRIEFING30 November 2012

2

PROGRAMME

12.30-13.00 Sandwich lunch6th floor dining room

13.00-15.00 Investor & Analyst presentation6th floor boardroom

15.00-16.00 De Beers Diamond tour

16.00-17.30 Christmas drinks6th floor

3

CAUTIONARY STATEMENT

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This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Anglo American. Further, it does not constitute arecommendation by Anglo American or any other party to sell or buy shares in Anglo American or any other securities. All written or oral forward-looking statements attributable to AngloAmerican or persons acting on their behalf are qualified in their entirety by these cautionary statements.

Forward-Looking Statements

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Certain statistical and other information about Anglo American included in this presentation is sourced from publicly available third party sources. As such it presents the views of those thirdparties, but may not necessarily correspond to the views held by Anglo American.

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The World’s Leading Diamond CompanyHighly Attractive Industry Fundamentals

Robust demand growth led by the emerging consumer middle class in developing economies – particularly China and India– China and India could account for half of global

demand by 2025 (up from 12% in 2008) Rough diamond supply structurally constrained, with no

material new production expected in the near future– declining output from ageing mines, peak global

production reached in 2006– few discoveries of major new deposits during the

past two decades Consequently, a structural supply demand gap is

expected to emerge throughout this decade– rough diamond production unable to keep pace with

new demand

The biggest producer in the most profitable part of the industry value chain

Global portfolio of high quality assets and unrivalled resource and reserve base– Part ownership of the industry’s flagship mines– Cost leadership; c. 70% of De Beers production is on

the lower end of the cost curve World-class diamond expertise and leading technology

across all parts of the value chain– leading sorting, distribution and marketing

capabilities via supplier of choice model– unrivalled global diamond exploration expertise

Iconic luxury brand heritage - proven ability to generate consumer demand and build end-market confidence

Focus on Attractive Products Asset Quality Filter

DE BEERS – STRONG FIT WITH ANGLO AMERICANSTRATEGY

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THE INTEGRATION OF DE BEERS AND ANGLO AMERICAN HAS BEEN FOCUSED ON…

Identifying and developing key areas of value

Strengthening relationships

Maintaining business momentum

• Limited change to De Beers' management structure

• Support for major De Beers strategic initiatives

• Emphasis on maintaining De Beers' unique brand

• Align De Beers more closely with Anglo American’s technical operational model

• Capture the scale benefits of the broader Anglo American Group

• Centralise certain corporate functions within Anglo American

• Enhance De Beers reporting systems and standards

• Deepen collaborative relationships with De Beers’ key partners

• Build close management cohesion

• Unlock additional benefits for De Beers employees

De Beers & theDiamond MarketLondon: 30 November 2012

London

Agenda

Overview: Diamonds & De Beers Philippe MellierCEO

Mining & Exploration Bruce CleaverExecutive Head, Strategy & Corporate Affairs

Sales Varda ShineExecutive Vice President, Global Sightholder Sales

Marketing Stephen LussierExecutive Vice President, Marketing

Technology Philippe MellierCEO

Financial overview Gareth MostynCFO

Summary & Outlook Philippe MellierCEO

Questions & Answers

7

Diamonds& De BeersPhilippe Mellier

London

Diamonds are unique

9

Demand Sources for Diamonds v. Gold and Platinum - 2011

$500,000

$500,000

$500,000

Differing values

Source: De Beers analysis; World Gold Council Gold Demand Trends FY2011, Feb 2012; Johnson Matthey Platinum charts 2011.

US is the top diamond jewellery market, with China and India expected to increase their share of diamond demand

10

Consumer Demand Forecasts (Nominal Polished Sales)

2011 ~ USD23bn 2016F ~USD31bn

USA37%

China 10%India

10%

Japan10%

Gulf8%

Taiwan2%

Hong Kong2%

Turkey2%

RoW19%

USA35%

China 15%

India13%

Japan7%

Gulf9%

Taiwan2%

Hong Kong2%

Turkey2% RoW

15%

+35%

Source: De Beers

Emergence of middle class and strength of luxury sector should continue to support demand for diamonds going forward

11

Global Growth of Middle Classes in emerging markets1

(2010 to 2015)Worldwide personal luxury goods market evolution (2010-2014F, €bn)

Global Growth of Middle Classes in emerging markets1

(2010 to 2015)

2010 2011E 2012F2 2013F2 2014F2

173191

201‐203216‐218

235‐240

CAGR 2011E‐14F+7‐9%

+10%

+6‐7%

+7‐8%

+8‐10%

Indonesia+55

Russia+32Brazil+21

Turkey+15Mexico+09

South Africa+05

India+180

China+142

Russia35% Turkey

34%

South Africa29%

Mexico25%

Indonesia115%

India97%

China83%

Brazil44%

Mins of people∆ 2010-2015

% change2010-2015

Note 1: Middle-class households are those with annual income >USD5,000 in China, India and Indonesia and exceeding $10,000 in the other countries.Note 2: At constant exchange rates Source: De Beers analysis from BCG report Winning in Emerging-Market Cities, Sep 2010; Altagamma Oct ‘12

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2012f 2013f 2014f 2015f

Year‐on‐Year % Growth

Global Polished Diamond Demand Growth

Macro-economic forecasts are supportive of growth in polished diamond demand over the short to medium term

12

Global Consumer Polished Demand Growth (nominal) (2012-15)

Source: De Beers

0

20

40

60

80

100

120

140

160

180

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

m c

ts

Baseline production Committed projects Probable projects

Long-term view: Production to recede gradually from pre-crisis levels after 2017

13

Global production in carats

Source: De Beers. All non-De Beers forecasts based on publicly available sources

Rough diamond industry now requires investment in new projects even to maintain production. In the next few years, additional production from Gahcho Kue, Argyle and Petra mines likely to bring production back to (but not above) pre-downturn levels.

A structural supply deficit should continue to provide the industry with price upside

Supply Demand Gap (smoothed from 2014)

14

Supply @ constant prices

Consumer Demand (nominal)

60

80

100

120

140

160

180

2011A 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F

Source: De Beers

De Beers strategy is focused on sustainably capturing the maximum value of each carat mined by the Group

15

Exploration & Projects ConsumersJewellery

RetailJewellery

ManufacturingPolished

Manufacturing & Trading

RoughDistribution & Trading

Mining


16


RetailJewellery




Mining


17


RetailJewellery




Mining

Technology & Innovation, Talent & Leadership

Explorationand Projects: • In-house

exploration (in conjunction with Anglo American)

• Accelerated exploration project decision making

Mining: • Flexible

operations to maximise value through the demand cycle

• Asset optimisation across operations (with Anglo American team support)

Distribution: • Build the smartest

distribution system to maximise the value of each rough carat

Downstream: • Support consumer

preference for diamonds in main consumer markets through branded propositions

• Consumer and trade intelligence

• Understanding downstream in support of rough diamond value maximisation

UpstreamOptimised Core Business

Commercial Unique ValueProposition

DownstreamDemand Generation and Future Growth Platform

De Beers participates in the exploration, mining, distribution and retail segments of the diamond pipeline

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• Leading producer of rough diamonds, based on a highly attractive long life asset base

• Unrivalled global diamond exploration expertise

• Proven sorting, valuing and distribution capabilities

• Leading distribution and marketing capabilities via supplier of choice model

• Proven ability to generate consumer demand and build end-market confidence

• Iconic luxury brand heritage

De Beers across the diamond pipeline

Debswana | 50%

Namdeb | 50%

South Africa | 74%

Canada | 100%

Exploration & Projects Consumers

JewelleryRetail

(includingDiamondbrands)

JewelleryManufacturing

Polished Manufacturing

& Trading


Mining

Group Exploration(with Anglo American)

DebTech

Global SightholderSales | 100%

DTC Botswana | 50%

DTC Namibia | 50%

Auction Sales | 100%

De Beers DiamondJewellers | 50%

Forevermark | 100%

Pat LoweryTechnical

Tony GuthrieCanada Mining

Philip BartonSouth Africa Mining

19

Upstream Midstream Downstream Support Element Six

Jim GowansDebswana

Inge ZaamwaniNamdeb Holdings

Neil VenturaAuction Sales

Varda ShineGlobal Sightholder Sales

Stephen LussierMarketing

Athene van MazijkHuman Resources

Gareth MostynFinance

Bruce CleaverStrategy, Business

Development & Corporate Affairs

Cyrus JillaElement Six

Philippe MellierCEO, De Beers Group

The world’s leading diamond company with a global footprint

20

MinesExplorationCorporate/Sales OfficesAuction SalesElement SixDe Beers Diamond JewellersForevermark

Mining& ExplorationBruce Cleaver

Diamond exploration challenge: finding economic diamond mines is difficult

22

Global discovery of ~7000 kimberlites has resulted in only 7 ‘Tier 1’1 mines

Diamond exploration resultsfrom the last 140 years (as of 2011)

Ore grade in equivalent: ppm concentration

Economic deposits vary significantly with wide ranges of: Grades: Kimberlites: 3 to 550cpht; Alluvials: 0.5 to 1,000cpht Volumes: ~1Mt –1150Mt Revenues: ~$20/ct – $3000/ct

Note 1. Over $20bn reserves. 7 finds are: Jwaneng, Orapa, Udachnaya, Venetia, Catoca, Premier, Mir

$3000/ct(Letseng)

Polymetallicmines

$38/ct(Marange)

7 000

1 000

500

0Tier 11EconomicDiamond-

iferous

1000

Kimberlites sampled

6 800

760

Source: De Beers analysis from publically available information

Exploration activity has been focused on five countries since 2009

23

De Beers exploration spend by country, 2009 - 2011 De Beers exploration is active in both operating and non-operating countries

$,m

2011

46

2010

47

2009

46

BotswanaAngolaCanada India Support & lab services

OtherSouth Africa

Non‐Operating Country0

10

20

30

40

50

Competitive advantage in diamond mining

● Strong safety record – will benefit from integration with Anglo American

● World’s leading producer by value, with the largest reserve base, providing scale and sustainable future production

● Well positioned project portfolio for the long-term, with a geographically diverse development plan– Jwaneng cut 8 (Botswana)

– Venetia underground (South Africa)

– Gahcho Kué (Canada)

● Reshaped mining portfolio in South Africa with a focus on mines that provide a superior level of return

● World leading diamond expertise● Cost savings implemented during the downturn

maintained● Proprietary diamond technology

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World’s leading producer by value, with the largest reserve base, providing scale and sustainable future production

25

Est. 2011 Supply Value ShareSupply Share in USD (2010-2011)

Note: May not add up due to rounding. Note 1: Sales from Russian production only. Excludes sales to the Gokhran. Sources: De Beers estimates; third-party data from publicly available company sources.

Est. Total Sales(USD bn) 2010 2011

De Beers 5.1 6.5

ALROSA1 3.3 4.3

Rio Tinto 0.7 0.7

BHP Billiton 1.0 0.9

SODIAM 1.0 1.2

Harry Winston 0.3 0.3

Zimbabwe 0.3 0.7

Artisanal/Informal 1.4 1.8

Other 2.2 2.9

Total Production 15.1 19.2

De Beers34%

ALROSA22%

Rio Tinto4%

BHP Billiton

5%

SODIAM6%

Harry Winston

1%

Zimbabwe4%

Artisana/ Informal

9%

Other15%

20% highest value carats account for almost 75% of total De Beers value of rough diamonds

Value v. Volume of Diamonds (De Beers Actual 2011 Sales)

26

Top 5% of carats = 47%of value

Top 50% of carats = 92% of value

Bottom 20% of carats = 1% of value

Note: Data includes Drilling & Boart plus Large Stones & Exceptional Stones (i.e. the full range of De Beers sales).Source: De Beers, March 2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Pro

porti

on o

f Tot

al 2

011

Sal

es V

alue

Proportion of Carats Sold

Production overview

27

● Production in line with Sightholder demand

● Reduced production in Q4 2011 and throughout 2012, focusing on waste-stripping and maintenance, and positioning mines for market upturn

*Includes other discontinued and sold operations

Mine Holding

2010 2011 H1 2012

CaratsRecovered

(mill)

CaratsRecovered (mill)

Carats Recovered (mill)

Jwaneng 50% 11.5 10.6 4.8

Orapa 50% 9.5 11.2 5.0

Venetia 74% 4.3 3.1 1.0

Others 7.7 6.4 2.6

Total* 33.0 31.3 13.4

More than 70% of De Beers production is located on the lower half of the cost curve

28

Higher margin assetsJw

anen

g

Gah

cho

Kue

(pro

ject

)

Ven

etia

Ora

pa

Nam

deb

oper

atio

nsD

amts

haa S

nap

lake

Cos

t/rev

enue

Cumulative revenue

Source: De Beers

Debswana

● 50/50 JV with the Government of the Republic of Botswana

Milestones– 1955 - The search for diamonds in Botswana began in the

Tuli Block in 1955. Three small alluvial diamonds were found along the Motloutse river

– 1969 - Following the discovery of Orapa, Debswana was formed

– 1982 - Jwaneng commences production and folded into Debswana

● Four open-pit mines: Jwaneng, Orapa, Letlhakane and Damtshaa mines

● Harmonised pre-tax 80.8/19.2 profit share (all mines) 2006 Master Agreement

● Produced 22.9 million carats in 2011, and is the largest producer in the Group

29

Jwaneng Mine

● Discovered by De Beers geologists in 1972. Jwaneng is an open pit mine, using traditional truck and shovel methods, located 160km west of Gaborone

● Comprises four known ore bodies (three large pipes and one small pipe), over approx 54ha and is the largest producer of diamonds in the world, by value

● Mining operations currently focused on the three larges pipes, North, Central and South

● Employs approximately 1700 people (excluding contractors)

● The mine is ISO14001 and OSHAS 18001 certified● Current life of mine to 2028 (including cut 8)

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2010 2011 H1 2012

Waste (tonnes millions) 43.8 50.8 38.6

Ore mined (tonnes millions) 6.7 6.7 3.2

Tonnes treated (tonnes millions) 8.2 6.5 3.2

Carats recovered (Carats millions) 11.5 10.6 4.8

Jwaneng Mine - Cut 8 project and mining operations will extend the life of the open pit from 2017 to 2028

Background● Cut 8 Waste to be mined: 660 Million tons● Cut 8 ore to be mined: 91 Million tons ● Cut 8 carats from ore mined: 102 Million carats● Infrastructure capital cost: P3.5bn

(approximately $450m)● First ore to plant in 2016

Progress to date● Infrastructure project completed below budget

(2010-2012)● Fleet largely procured● Mining of waste commenced in 2010● Mining of waste done by JV contract mining team

Majwe● Waste mined to date – 112 Mt.

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Cut‐8 planCut‐8 plan

Orapa Regime

● First discovered in 1966, the Orapa Regime (cluster) consists of Orapa, Letlhakane and Damtshaa Mines, which are open-pit operations using traditional truck and shovel methods, and clustered in a radius of under 25km in the Central District of Botswana

● It comprises one large pipe divided into two volcanic conduits that have coalesced at surface over and area of approximately 117ha

● Mining operations are currently taking place in cut 2, with cut 3 to follow

● Orapa Regime currently employs approximately 2500 people

● The mine is ISO14001 and OSHAS 18001 certified● Current life of mine to 2033

32

2010 2011 H1 2012





South Africa

● 74% (De Beers) / 26% (BEE partner Ponahalo Holdings)

● Milestones: – 1888: De Beers Consolidated Mines created

– 2006: Ground-breaking BEE deal with Ponahalo Holdings

– 2006-2010: Portfolio significantly reshaped

● Three mining operations: open-pit mines of Venetia and Voorspoed, and a tailings resource recovery operation at Kimberley

● Produced 5.4 million carats in 2011

33

Venetia Mine

● Discovered in 1980, the Venetia kimberlite cluster lies 90km west of Musina, in the Limpopo province

● It comprises 15 known bodies (13 pipes and two dykes), outcrops over an area of approximately 4ha and is the largest producer of diamonds in South Africa

● Mining operations are focused on the three largest pipes, K1, K2 and K3

● Venetia Mine currently employs approximately 1200 people

● The mine is ISO14001 and OSHAS 18001 certified● Current life of mine to 2043 (including Venetia

underground)

34

2010 2011 H1 2012





Venetia underground

● Venetia underground project will extend the life of South Africa’s largest diamond mine until at least 2043, yielding approximately 111 million carats

● Mining two main ore bodies below the current open pit cut (Cut 4) from circa 2021

● Start up capital is R 12.4 bn in 2012 money terms (R 19.9 bn in nominal terms)

35

● Solution considers two vertical shafts (Service and Production) to 1040 metres

● Sub Level Caving (SLC) mining method, producing on average 6 million tons per annum and 4.4 million carats per annum

● The Environmental Authorisation (EA) was issued on 13 July 2012, while the EMP was approved on 1 October 2012

● Final regulatory approvals imminent

North East

0m

Service shaft

South West

Production shaft

Main Prod W/S

Pump station, dams, settler &

Launder

550m – Twin access

1040m - # bottom

900m - Twin access

960m - Loading level

725m – Twin access

K2 Modified

SLC

K1 SLC

Crushers

450m – K1 Pit Bottom

300m –K2 Pit Bottom

RAP

990m - pump station

925m – Truck loop

150m – K3 Pit Bottom

Namdeb Holdings

● 50/50 JV with Government of the Republic of Namibia, and owns 100% of Namdeb (land) and Debmarine Namibia (sea) licences to 2020

● The marine mining operations operate off the coast of Namibia in water depths of 80-130m

● The alluvial land operations are conducted along the south-western coast and inland areas of the Karas Region and between the coastal towns of Oranjemund and Lüderitz

● In 2011 marine produced 990,000 carats, and land-based operations produced 346,000 carats

● The marine fleet consists of five vertical mining and one horizontal mining vessel plus chartered vessels for exploration and geo-survey operations

● Upgrades to two vessels in 2013 aimed at increasing mining rates

36

Canada

● 100% De Beers owned● Two mining operations: Snap Lake mine

(underground mine) in the Northwest Territories (NWT) and Victor mine (open pit mine) in northern Ontario

● Produced 1.7 million carats in 2011● Gahcho Kué, De Beers (51%) JV with Mountain

Province Diamonds (49%), located 80 km southeast of Snap Lake mine– Feasibility study approved in June 2011

– Mine life 11 years

– De Beers share of capex is approx $350 million

– Permitting at an advanced stage

● Annual average production: 4.5 million carats● Chidliak diamond deposit on Baffin Island in

Nunavut– Due diligence for advanced exploration completed

– De Beers retains an option to partner with Peregrine Diamonds Ltd until end 2013

37

Midstream

Varda Shine

38

Our customers operate across the globe, with most industry cutting and polishing in India

39

There are many activities in the mid and down stream and our customers are involved in most areas

40

Primary Model

Dealers

Dealers / Preparers

Dealers / C&P

Dealers / C&P / JM

C&Ps

C&P / JM

C&P / JM / Retail

Retailers

Rough Dealing Preparing Cutting &

PolishingPolished

WholesaleJewellery

Manu-facturing

Jewellery Wholesale Retail

Competitive advantage in rough diamond distribution

● World’s largest distributor of rough diamonds, with activities in sorting, valuing, sales and diamond beneficiation

● Scale and mix of resource allows for aggregation of goods and enables long-term supply contracts

● Beneficiation is a core part of the De Beers business model, providing value and strengthening relationships with our producer partners

● World class diamond expertise● Proprietary diamond technology

41

Integrated two-channel distribution system to serve different customer types with differing needs

42

DYNAMISM

GLOBAL SIGHTHOLDERSALES Three year contract 76 Sightholders Regular, planned

supply Intellectual Property

benefits

AUCTION SALES

Wide customer base – 571 registered auction participants

Equal opportunity to purchase – but no guarantee of supply

The 2 channels provide a long-term and a spot proposition

43

Global Sightholder Sales~90% of Sales76 Sightholders

Sightholders are chosen based on their ability to add value to the rough•Compliance criteria•Relative performance criteria•Beneficiation criteria

Each Sightholder is given an “Intention to Offer” (ITO) in particular boxes•Three 12 month ITOs within a three year contract•12-month expectation of the supply level in each box•Sightholders can express a “preferred delivery schedule” (PDS) for when they would like their allocation delivered•Global Sightholder Sales matches this PDS with expected production delivery to create a Sight Plan

Prices set at Standard Selling Value (SSV)•SSV is the price at which we can capture and drive long term optimal value for the product

Auction Sales~10% of Sales571 Registered Auction ParticipantsBoth Sightholders and non-Sightholders

Limited entry criteria•Declaration of Best Practice Principles compliance•Anti-Money Laundering /Know-Your-Customer compliance checking

The auctions are a “spot” proposition•Auction lots are generally parts of boxes•Different types of auctions used, dependent on desired results (e.g. closed English, Multi-unit auctions)

Prices are determined by buyers from across the global markets in a competitive and anonymous online negotiation•The result is the market price for our products

Botswana sales agreement

● 10 year sales agreement was signed in 2011 (effective 1 January 2011)

● Requires the transfer of all of De Beers functions which relate directly to the sale of Debswana diamonds to Botswana by the end of 2013

● If achieved, De Beers will receive financial benefit in the form of increased margin received in the 100% owned Global Sightholder Sales

● The agreement introduces a purchase entitlement or “sales window” offered to the GRB, initially equivalent to 10% of Debswana production on a run of mine basis and growing to 15% by 2016

44

Flow of goods through Botswana

45

DTCB

DBUK / DBGSS GRB Window

Debswana

90% SSV

10-15% of goods at 94-95% SSV

85-90% of goods at 94-95% SSV

Local Sightholders

100% SSV

Global Sightholders

100% SSV

100% SSV

Flow of goods through Namibia

46

NDTC

DBUK / DBGSS Local Sightholders

Namdeb

90% SSV

95% SSV

100% SSV

100% SSV

Global Sightholders

100% SSV

Flow of goods through South Africa

47

DTC SA

DBUK / DBGSS Local Sightholders

DBCM

90% SSV

100% SSV95% SSV

100% SSV

100% SSV

Global Sightholders

100% SSV

SDT

Downstream

Stephen Lussier

48

Strong downstream expertise & track record in creating demand will unlock further value

49

De Beers has a track record of creating demand for diamonds in different countries

USA … … and now China

% of first time brides who receive a diamond only engagement ring

10%

80%

1940 1990

50 yearsCAGR: 4.2%

Peak

(%)

31%

1994 2010

16 yearsCAGR: 23.9%

(%)

… Japan …

5%

77%

1965 1995

30 yearsCAGR: 9.5%

(%)

Peak

?

Peak year

Source: De Beers

De Beers Diamond Jewellers

● Independently managed 50/50 retail joint venture with Louis Vuitton Moët Hennessy LVMH

● 44 stores in leading diamond consumer markets around the world

● Business split roughly between USA, Japan, Europe and Asia

● 2011/2012 expansion in mainland China● Focus on driving productivity of existing stores

50

De Beers Diamond Jewellers – Business Shifting East

Forevermark

● The diamond brand from the De Beers Group of Companies that come with a promise that they are beautiful, rare and responsibly sourced

● Diamonds that meet Forevermark’s standards are inscribed with the Forevermark icon and a unique identification number (both are invisible to the naked eye)

● Launched in the core markets of China, Japan, Hong Kong in 2009 and India and the US in 2011– Over 900 retail partners in 12 markets– 583,000 diamonds inscribed to date– 172,000 diamonds graded to date

● Strong growth in 2012 (35-45% up YTD)– Reinforces our view that branded diamonds command a

premium

● Primary mechanism for De Beers diamond marketing, re-enforcing the emotional symbolism of diamonds and addressing synthetic and ethical risks

● Provides deeper insight into polished / retail markets

51

Technology

Philippe Mellier

52

World-class technology

● Proprietary technology provides De Beers with competitive advantage across the diamond pipeline

● ‘Sea walker’ used to extract diamonds from along the surf zone

● State of the art technology to mine diamonds from the sea bed

● Machine based colour and clarity sorting providing accuracy, consistency, objectivity of measurement and cost reduction

● Sophisticated equipment to detect natural diamonds from synthetic and treated diamonds underpins the integrity and value of natural diamonds

● Patented inscription technology for Forevermark diamonds

53

Element Six

● World’s leading synthetic diamond supermaterials company

● Element Six Abrasives SA (~60% owned by De Beers, ~40% owned by Umicore) - solutions for abrasive applications including cutting, grinding, drilling, shearing, polishing

● Element Six SA (100% owned by De Beers) –utilises the extreme properties of synthetic diamond in new applications including optics, thermal management, environmental sensors and water treatment and even high end speaker technology (received Queen’s Award for Enterprise in Innovation)

● 2,500 employees worldwide and sales of ~$500 million

● Supply ~3,000 global customers● Manufactures synthetic diamond from carbon using

high pressure high temperature (HPHT) synthesis and chemical vapour deposition (CVD)

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Financials

Gareth Mostyn

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2010 2011 H1 2012

Half 2

Half 1

Total Sales ($ billion)

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

FY 2010 FY 2011 H1 2012

Other

Element Six

Auction sales

Global Sightholder Sales

Sales Analysis ($ billion)

Financials

● During H1, total sales decreased 14 percent to US$3.3 billion (2011: US$3.9 billion)

● Sales of rough diamonds in H1 were US$3.1 billion (2011: 3.5 billion)

● After strong Q1-Q3 in 2011, the final quarter of last year and 2012, have been characterised by weaker demand and changing product requirements from Sightholders

● Q3 this year saw a further softening in demand and price, albeit with slightly firmer conditions in Q4

56

Financials

● During H1, production totalled 13.4 million carats (H1 2011: 15.5 million carats)

● In light of prevailing market conditions that began in Q4 2011, operations continued to focus on maintenance and waste stripping, positioning De Beers for the future

● Slope failure resulted in approx 1.5m carats of production deferred from H2 production

● Rough diamond price index remained relatively stable during H1 despite challenging trading conditions

● A price adjustment occurred in Q3, with a subsequent stabilisation

● Realised prices also reflect slight shift to lower quality product mix than prior year

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Production (cts millions)

0

1

2

3

4

5

6

7

8

9

10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2010 2011 2012

South Africa

Namibia

Canada

Botswana

Discontinued Operations

H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012

Diamond price index

+19%

+8%

+34%

‐5% 0%

Summary & Outlook

Philippe Mellier

In 2012, total market likely to be up in low to mid single digits

Market(world share) 2011A

2012 8m E*

2012FBase

USA (37%) 8% 4% 4%

China (10%) 25% 10% 11%

India (10%) 9% ‐3% ‐1%

Japan (10%) 8% 7% 7%

ROW (33%) 10% ‐1% ‐1%

Total World 10% 3% 4%

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Overview of H1, 2012

Forecast of H2, 2012

• Despite a considerable slowdown in China, absolute growth rates likely to have remained highest in this market

• After a reasonable Q1 in the US, the market softened in Q2

• H1 was unsettled for India with jewellery retailer strikes and low consumer confidence in the face of high inflation, slower growth and weakening Rupee

• However larger public retailers reported positive results

• General anticipation of slightly improved performance in H2 due to the traditionally strong autumn and Q4 range of festivals (Diwali, Golden Week and Christmas)

• In China, there was anticipation that government actions would boost consumer confidence and spending in China in H2 but there has probably been a sharper slowdown than expected

• India likely to remain subdued, as it continues to face challenges of low growth combined with high inflation and a weak INR

• Total market likely to be up in low to mid single digits

*Estimate based on public retailer results only, not comprehensive market dataNote: All numbers are rounded. All figures are approximate

Growth by Market (USD Polished Sales Growth)

Summary

● Diamonds are not a commodity● Growing consumer demand for diamond jewellery, driven by China and India, coupled with

flat production in the short to medium term, will result in a structural supply deficit that should yield price upside for the industry

● De Beers strategy is focused on sustainably capturing the maximum value of each carat mined by the Group, focusing on customer needs

● Strong management team in place● Diamond industry leadership: exploration, mining, distribution, marketing, technology

– World’s leading producer by value, with the largest reserve base, providing scale and sustainable future production

– Scale and mix of resource allows for aggregation of goods and enables long-term supply contracts

– Iconic brand and proven ability to build consumer markets

– Proprietary technology provides competitive advantage across the pipeline

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debeersgroup.com

Appendices

Production output by operation

Mine Holding2010 2011 H1 2012

Carats Recovered (‘000)

Jwaneng 50% 11,470 10,641 4,816

Orapa 50% 10,749 12,248 5,479

Venetia 74% 4,287 3,146 1,037

Voorspoed 74% 732 580 247

Kimberley 74% 823 778 354

Snap Lake 100% 926 882 381

Victor 100% 826 779 358

Namdeb 50% 402 346 252

DBMN 50% 980 990 526

Finsch 74% 1,583 936 -

Total 32,998 31,326 13,451

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Voorspoed Mine

● Open pit mine located in Free State Province, mined using traditional truck and shovel methods

● Every employee has completed secondary school and at least 25% of technical and mining jobs are held by women; 36% of the total mine complement is female

● Voorspoed Mine currently employs approximately 400 people directly


64

2010 2011 H1 2012

Waste (tonnes ‘000) 7 609 10 877 5 502

Ore mined (tonnes ‘000) 2 976 2 293 1 298

Tonnes treated (tonnes ‘000) 3 016 2 434 1 257

Carats recovered (Carats ‘000) 732 580 247

Snap Lake Mine

● Snap Lake Mine is Canada’s first completely underground diamond mine and De Beers’ first mine outside Africa

● It is located 220 km northeast of Yellowknife in the NWT

● Ore body is a 2.5 m thick dyke that dips an average of 12 – 15 degrees from the NW shore down under the lake

● Snap Lake Mine currently employs approximately 500 people directly


65

2010 2011 H1 2012

Waste (tonnes ‘000) 223 213 60

Ore mined (tonnes ‘000) 855 808 405

Tonnes treated (tonnes ‘000) 869 813 411


Victor Mine

● Victor Mine is an open pit mine, and Ontario’s first diamond mine

● It is located in James Bay Lowlands 90 km west of Attawapiskat

● Victor is one of 18 kimberlites, 16 of which are diamondiferous

● Victor Mine currently employs approximately 400 people directly


66

2010 2011 H1 2012

Waste (tonnes ‘000) 6 952 6 618 2 690

Ore mined (tonnes ‘000) 2 660 2 844 1 640

Tonnes treated (tonnes ‘000) 2 733 2 731 1 524


Documents

De Beers Diamonds FINAL.ppt · 2 PROGRAMME 12.30-13.00 Sandwich lunch 6th floor dining room 13.00-15.00 Investor & Analyst presentation 6th floor boardroom 15.00-16.00 De Beers Diamond