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Russian diamond threat to De Beers

DE BEERS, the South African diamond group, has blamed unauthorised sales of Russian stones for a predicted sharp drop in rough diamond sales over the second half of the year.

The company, which controls the sale of more than 80 per cent of the world's rough diamonds, said the amount of Russian stones on the market had undermined confidence in cutting centres.

De Beers said that because it had cut back the amount of diamonds it was offering to the market in an attempt to stabilise supply, sales in the second half were likely to be 'well below' those in the first. .

Despite stronger diamond sales in the first six months, De Beers' profits slipped by about 3.4 per cent. Combined net attributable earnings at South African De Beers Consolidated Mines and De Beers Centenary, its Swiss-based offshore arm, fell to dollars 341m (dollars 353m).

Higher tax charges, up dollars 15m at dollars 101m, and a weaker rand contributed. Pre-tax profits were just up on last year at dollars 447m (dollars 444m).

Earnings from the diamond account and investment income were both up, rising dollars 20m to dollars 393 and dollars 12m to dollars 123m respectively.

Interest income fell from dollars 33m to dollars 29m, prospecting and research costs rose from dollars 37m to dollars 52m and interest on higher borrowings was up from dollars 30m to pounds 44m. Strong first- half sales helped cut diamond stocks by dollars 95m to just under dollars 4.03bn.