DIAMONDS BRIEFING. 30 November 2012

Transcription

1 DIAMONDS BRIEFING 30 November 2012

2 PROGRAMME Sandwich lunch 6 th floor dining room Investor & Analyst presentation 6 th floor boardroom De Beers Diamond tour Christmas drinks 6 th floor 2

3 CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo American plc ( Anglo American ) and comprises the written materials/slides for a presentation concerning Anglo American. By attending this presentation and/or reviewing the slides you agree to be bound by the following conditions. 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 a recommendation 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 Anglo American or persons acting on their behalf are qualified in their entirety by these cautionary statements. Forward-Looking Statements This presentation includes forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding Anglo American s financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American s products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Anglo American s present and future business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause Anglo American s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American s most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this presentation. Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the Takeover Code ), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Nothing in this presentation should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share. 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 third parties, but may not necessarily correspond to the views held by Anglo American. No Investment Advice This presentation has been prepared without reference to your particular investment objectives, financial situation, taxation position and particular needs. It is important that you view this presentation in its entirety. If you are in any doubt in relation to these matters, you should consult your stockbroker, bank manager, solicitor, accountant, taxation adviser or other independent financial adviser (where applicable, as authorised under the Financial Services and Markets Act 2000 in the UK, or in South Africa, under the Financial Advisory and Intermediary Services Act 37 of 2002.). 3

4 DE BEERS STRONG FIT WITH ANGLO AMERICAN STRATEGY Focus on Attractive Products Asset Quality Filter Highly 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 World s Leading Diamond Company 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 4

5 THE INTEGRATION OF DE BEERS AND ANGLO AMERICAN HAS BEEN FOCUSED ON Maintaining business momentum Limited change to De Beers' management structure Support for major De Beers strategic initiatives Emphasis on maintaining De Beers' unique brand Identifying and developing key areas of value 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 Strengthening relationships Deepen collaborative relationships with De Beers key partners Build close management cohesion Unlock additional benefits for De Beers employees 5

6 De Beers & the Diamond Market London: 30 November 2012 London

7 Agenda Overview: Diamonds & De Beers Mining & Exploration Sales Marketing Technology Financial overview Summary & Outlook Questions & Answers Philippe Mellier CEO Bruce Cleaver Executive Head, Strategy & Corporate Affairs Varda Shine Executive Vice President, Global Sightholder Sales Stephen Lussier Executive Vice President, Marketing Philippe Mellier CEO Gareth Mostyn CFO Philippe Mellier CEO 7

8 Diamonds & De Beers Philippe Mellier London

9 Diamonds are unique Demand Sources for Diamonds v. Gold and Platinum Differing values $500,000 $500,000 $500,000 Source: De Beers analysis; World Gold Council Gold Demand Trends FY2011, Feb 2012; Johnson Matthey Platinum charts

10 US is the top diamond jewellery market, with China and India expected to increase their share of diamond demand Consumer Demand Forecasts (Nominal Polished Sales) 2011 ~ USD23bn 2016F ~USD31bn Turkey 2% Hong Kong 2% Taiwan 2% Gulf 8% RoW 19% USA 37% +35% Hong Kong 2% Taiwan 2% Turkey Gulf 9% 2% RoW 15% USA 35% Japan 10% India 10% China 10% Japan 7% India 13% China 15% 10 Source: De Beers

11 Emergence of middle class and strength of luxury sector should continue to support demand for diamonds going forward Global Growth of Middle Classes in emerging markets 1 (2010 to 2015) Mins of people China +142 India +180 Indonesia +55 Russia +32 Brazil +21 Turkey +15 Mexico +09 South Africa +05 Global Growth of Middle Classes in emerging markets 1 (2010 to 2015) Brazil Russia % change 44% 35% Turkey % China 83% India 97% Indonesia 115% South Africa 29% Mexico 25% Worldwide personal luxury goods market evolution ( F, bn) % % CAGR 2011E 14F +7 9% % % E 2012F F F 2 11 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

12 Macro-economic forecasts are supportive of growth in polished diamond demand over the short to medium term Global Consumer Polished Demand Growth (nominal) ( ) 7.0% Global Polished Diamond Demand Growth 6.0% Year on Year % Growth 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2012f 2013f 2014f 2015f 12 Source: De Beers

13 Long-term view: Production to recede gradually from pre-crisis levels after 2017 Global production in carats m cts 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 Baseline production Committed projects Probable projects 13 Source: De Beers. All non-de Beers forecasts based on publicly available sources

14 A structural supply deficit should continue to provide the industry with price upside Supply Demand Gap (smoothed from 2014) Consumer Demand (nominal) constant prices A 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 14 Source: De Beers

15 De Beers strategy is focused on sustainably capturing the maximum value of each carat mined by the Group Exploration & Projects Mining Rough Distribution & Trading Polished Manufacturing & Trading Jewellery Manufacturing Jewellery Retail Consumers 15

16 De Beers strategy is focused on sustainably capturing the maximum value of each carat mined by the Group Exploration & Projects Mining Rough Distribution & Trading Polished Manufacturing & Trading Jewellery Manufacturing Jewellery Retail Consumers 16

17 De Beers strategy is focused on sustainably capturing the maximum value of each carat mined by the Group Upstream Optimised Core Business Commercial Unique Value Proposition Downstream Demand Generation and Future Growth Platform Exploration & Projects Mining Rough Distribution & Trading Polished Manufacturing & Trading Jewellery Manufacturing Jewellery Retail Consumers Exploration and 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 Technology & Innovation, Talent & Leadership 17

18 De Beers participates in the exploration, mining, distribution and retail segments of the diamond pipeline De Beers across the diamond pipeline Exploration & Projects Mining Rough Distribution & Trading Polished Manufacturing & Trading Jewellery Manufacturing Jewellery Retail (including Diamond brands) Consumers Group Exploration (with Anglo American) Debswana 50% Global Sightholder Sales 100% De Beers Diamond Jewellers 50% DebTech Namdeb 50% DTC Botswana 50% Forevermark 100% South Africa 74% DTC Namibia 50% Canada 100% Auction Sales 100% 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 18

19 Philippe Mellier CEO, De Beers Group Pat Lowery Technical Varda Shine Global Sightholder Sales Stephen Lussier Marketing Bruce Cleaver Strategy, Business Development & Corporate Affairs Cyrus Jilla Element Six Tony Guthrie Canada Mining Neil Ventura Auction Sales Gareth Mostyn Finance Philip Barton South Africa Mining Athene van Mazijk Human Resources Jim Gowans Debswana Inge Zaamwani Namdeb Holdings Upstream Midstream Downstream Support Element Six 19

20 The world s leading diamond company with a global footprint Mines Exploration Corporate/Sales Offices Auction Sales Element Six De Beers Diamond Jewellers Forevermark 20

21 Mining & Exploration Bruce Cleaver

22 Diamond exploration challenge: finding economic diamond mines is difficult Global discovery of ~7000 kimberlites has resulted in only 7 Tier 1 1 mines Ore grade in equivalent: ppm concentration Diamond exploration results from the last 140 years (as of 2011) Polymetallic mines $3000/ct (Letseng) 0 Kimberlites sampled Diamondiferous 60 Economic 7 Tier 1 1 $38/ct (Marange) Note 1. Over $20bn reserves. 7 finds are: Jwaneng, Orapa, Udachnaya, Venetia, Catoca, Premier, Mir 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 22 Source: De Beers analysis from publically available information

23 Exploration activity has been focused on five countries since 2009 De Beers exploration spend by country, De Beers exploration is active in both operating and non-operating countries $,m Canada India Support & lab services Angola South Africa Botswana Other Non Operating Country 23

24 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 24

25 World s leading producer by value, with the largest reserve base, providing scale and sustainable future production Supply Share in USD ( ) Est Supply Value Share Est. Total Sales (USD bn) De Beers ALROSA Rio Tinto Artisana/ Informal 9% Other 15% De Beers 34% BHP Billiton Zimbabwe 4% SODIAM Harry Winston Harry Winston 1% Zimbabwe Artisanal/Informal Other Total Production SODIAM 6% BHP Billiton 5% Rio Tinto 4% ALROSA 22% 25 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.

26 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) Proportion of Total 2011 Sales Value 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Top 5% of carats = 47% of value Top 50% of carats = 92% of value Bottom 20% of carats = 1% of value 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Proportion of Carats Sold 26 Note: Data includes Drilling & Boart plus Large Stones & Exceptional Stones (i.e. the full range of De Beers sales). Source: De Beers, March 2012

27 Production overview Mine Holding H Carats Recovered (mill) Carats Recovered (mill) Carats Recovered (mill) Jwaneng 50% Orapa 50% Production in line with Sightholder demand Reduced production in Q and throughout 2012, focusing on wastestripping and maintenance, and positioning mines for market upturn Venetia 74% Others Total* *Includes other discontinued and sold operations

28 More than 70% of De Beers production is located on the lower half of the cost curve Higher margin assets Cost/revenue Jwaneng Gahcho Kue (project) Venetia Orapa Namdeb operations Damtshaa Snap lake Cumulative revenue 28 Source: De Beers

29 Debswana 50/50 JV with the Government of the Republic of Botswana Milestones The search for diamonds in Botswana began in the Tuli Block in Three small alluvial diamonds were found along the Motloutse river Following the discovery of Orapa, Debswana was formed 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

30 Jwaneng Mine Discovered by De Beers geologists in 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 certified Current life of mine to 2028 (including cut 8) Waste (tonnes millions) Ore mined (tonnes millions) Tonnes treated (tonnes millions) Carats recovered (Carats millions) H

31 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 ( ) 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. Cut 8 plan 31

32 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 certified Current life of mine to 2033 Waste (tonnes millions) Ore mined (tonnes millions) Tonnes treated (tonnes millions) Carats recovered (Carats millions) H

33 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 : 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

34 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 certified Current life of mine to 2043 (including Venetia underground) H Waste (tonnes millions) Ore mined (tonnes millions) Tonnes treated (tonnes millions) Carats recovered (Carats millions)

35 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) South West Production shaft Service shaft RAP 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 150m K3 Pit Bottom 300m K2 Pit Bottom 550m Twin access 725m Twin access Main Prod W/S K2 Modified SLC 450m K1 Pit Bottom K1 SLC 900m - Twin access 960m - Loading level 990m - pump station 1040m - # bottom Pump station, dams, settler & Launder Crushers 925m Truck loop 35

36 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 m 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 landbased 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

37 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

38 Midstream Varda Shine 38

39 Our customers operate across the globe, with most industry cutting and polishing in India 39

40 There are many activities in the mid and down stream and our customers are involved in most areas Primary Model Rough Dealing Preparing Cutting & Polishing Polished Wholesale Jewellery Manufacturing Jewellery Wholesale Retail Dealers Dealers / Preparers Dealers / C&P Dealers / C&P / JM C&Ps C&P / JM C&P / JM / Retail Retailers 40

41 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

42 Integrated two-channel distribution system to serve different customer types with differing needs GLOBAL SIGHTHOLDER SALES Three year contract 76 Sightholders Regular, planned supply Intellectual Property benefits DYNAMISM AUCTION SALES Wide customer base 571 registered auction participants Equal opportunity to purchase but no guarantee of supply 42

43 The 2 channels provide a long-term and a spot proposition Global Sightholder Sales ~90% of Sales 76 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 Sales 571 Registered Auction Participants Both 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 43

44 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

45 Flow of goods through Botswana Global Sightholders 100% SSV Local Sightholders 100% SSV DBUK / DBGSS 85-90% of goods at 94-95% SSV GRB Window 100% SSV DTCB 10-15% of goods at 94-95% SSV 90% SSV Debswana 45

46 Flow of goods through Namibia Global Sightholders 100% SSV DBUK / DBGSS Local Sightholders 95% SSV 100% SSV 100% SSV NDTC 90% SSV Namdeb 46

47 Flow of goods through South Africa Global Sightholders 100% SSV DBUK / DBGSS Local Sightholders 100% SSV 95% SSV 100% SSV DTC SA SDT 90% SSV DBCM 100% SSV 47

48 Downstream Stephen Lussier 48

49 Strong downstream expertise & track record in creating demand will unlock further value De Beers has a track record of creating demand for diamonds in different countries % of first time brides who receive a diamond only engagement ring USA Japan and now China 50 years CAGR: 4.2% 30 years CAGR: 9.5% 16 years CAGR: 23.9% Peak Peak (%) 80% (%) 77% (%)? 31% 10% 5% Peak year 49 Source: De Beers

50 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 De Beers Diamond Jewellers Business Shifting East 50

51 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

52 Technology Philippe Mellier 52

53 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

54 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) 54

55 Financials Gareth Mostyn

56 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$3.1 billion (2011: 3.5 billion) After strong Q1-Q3 in 2011, the final quarter of last year and 2012, have been characterised by weaker demand and changing product requirements from Sightholders Q3 this year saw a further softening in demand and price, albeit with slightly firmer conditions in Q4 Total Sales ($ billion) H Sales Analysis ($ billion) Half 2 Half Other Element Six Auction sales Global Sightholder Sales FY 2010 FY 2011 H

57 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 Production (cts millions) South Africa Namibia Canada Botswana Discontinued Operations Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Diamond price index 5% 0% +34% +8% +19% H H H H H H

58 Summary & Outlook Philippe Mellier

59 In 2012, total market likely to be up in low to mid single digits Growth by Market (USD Polished Sales Growth) Market m 2012F (world share) 2011A E* Base 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% *Estimate based on public retailer results only, not comprehensive market data Note: All numbers are rounded. All figures are approximate Overview of H1, 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 Forecast of H2, 2012 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 59

60 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 60

61 debeersgroup.com

62 Appendices

63 Production output by operation Mine Holding H 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% Kimberley 74% Snap Lake 100% Victor 100% Namdeb 50% DBMN 50% Finsch 74% 1, Total 32,998 31,326 13,451 63

64 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 The mine is ISO14001 and OSHAS certified Current life of mine to Waste (tonnes 000) Ore mined (tonnes 000) Tonnes treated (tonnes 000) Carats recovered (Carats 000) H

65 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 degrees from the NW shore down under the lake Snap Lake Mine currently employs approximately 500 people directly The mine is ISO14001 and OSHAS certified Current life of mine to H Waste (tonnes 000) Ore mined (tonnes 000) Tonnes treated (tonnes 000) Carats recovered (Carats 000)

66 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 The mine is ISO14001 and OSHAS certified Current life of mine to H Waste (tonnes 000) Ore mined (tonnes 000) Tonnes treated (tonnes 000) Carats recovered (Carats 000)

67