DeBeers

COMPANY PROFILE

De Beers SA

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TABLE OF CONTENTS

Company Overview..............................................................................................3

Key Facts...............................................................................................................3

Business Description...........................................................................................4

History...................................................................................................................6

Key Employees...................................................................................................10

Key Employee Biographies................................................................................11

Major Products and Services............................................................................17

Revenue Analysis...............................................................................................18

SWOT Analysis...................................................................................................19

Top Competitors.................................................................................................22

Company View.....................................................................................................23

Locations and Subsidiaries...............................................................................26

De Beers SA © MarketLine

De Beers SATABLE OF CONTENTS

COMPANY OVERVIEW

De Beers SA (De Beers or the company) is a private holding company engaged in the exploration,mining, and marketing of diamonds. It is one of the largest diamond mining companies in the world.The company operates in Africa and Canada and markets its products across the globe. It isheadquartered in Johannesburg, South Africa and employed 12,124 people as of December 2011.

The company recorded revenues of $7,378 million during the financial year ended December 2011(FY2011), an increase of 25.5% over FY2010.The operating profit was $784 million during FY2011,an increase of 64% over FY2010. The net profit was $939 million in FY2011, an increase of 72%over FY2010.

KEY FACTS

De Beers SAHead OfficeCNR Diamond Drive and Crownwood RoadThetaJohannesburg 2013ZAF

27 11 374 7000Phone

Fax

http://www.debeersgroup.comWeb Address

7,378.0Revenue / turnover(USD Mn)

DecemberFinancial Year End

12,124Employees


De Beers SACompany Overview

BUSINESS DESCRIPTION

De Beers is one of the largest diamond mining and marketing companies in the world.The companyproduces and markets approximately 35% of the world’s supply of rough diamonds by value. DeBeers also has interests in companies manufacturing synthetic diamonds and abrasive products.De Beers is owned by Anglo American (85%), and the Government of Botswana (15%).The companyis active in every category of diamond mining: open pit; underground; alluvial; coastal; and undersea.The company operates in Africa and Canada and markets its products across the globe.

De Beers operates through the following subsidiaries: Debswana Diamond Company; NamdebDiamond Corporation (Namdeb); De Beers Consolidated Mines; De Beers Canada; Diamond TradingCompany; De Beers Diamond Jewellers; Diamdel; Element Six; and Forevermark.

Through a joint venture named Debswana Diamond Company (Debswana), with the Governmentof Botswana, De Beers dominates diamond production in Botswana. Debswana has about fouroperational mines which include Damtshaa, Letlhalkane, Orapa, and Jwaneng. Jwaneng is therichest diamond mine in the world, and the largest of the three mines. Debswana produced 22.9million carats at its open pit operations in FY2011.

Namdeb, Namibia's largest diamond producer is an equal partnership between De Beers and theNamibian Government. The company is responsible for sorting, valuing, and marketing diamondobtained from Namibia. It operates onshore mining operations as well as marine mining. De BeersMarine mines off the south west coast of Namibia in the Atlantic 1 license area of Namdeb, as theexclusive contractor. De Beers Marine operates a fleet of five mining vessels. In FY2011, Namdebproduced 0.3 million carats from land-based operations and one million carats from sea-basedoperations.

De Beers Consolidated Mines (DBCM) operates three mining operations in Africa:Venetia; Kimberley;and Voorpsoed. In FY2011, DBCM recovered 5.4 million carats from 15.5 million tons treated.

De Beers Canada is a wholly-owned subsidiary of the De Beers group operating in Canada. DeBeers Canada operates two producing mines: the Snap Lake Mine, De Beers’ first mine outside ofAfrica and which is Canada’s first completely underground diamond mine; and the Victor Mine, whichis Ontario’s first diamond mine and the second in Canada for De Beers. De Beers Canada is alsoinvolved in one advanced exploration project, the Gahcho Kue project, which is a joint venturebetween De Beers Canada (51%) and Mountain Province Diamonds (49%). In FY2011, De BeersCanada produced a total of 1.7 million carats from 3.5 million tons treated.

Diamond Trading Company (DTC) is the rough diamond arm of De Beers. It supplies about 35% to40% of all rough diamonds on the market. DTC receives rough diamonds primarily from De Beers'mines in Botswana, Namibia, and South Africa.With activities in sales, sorting, valuing, and diamondbeneficiation, DTC has representative offices in the UK and South Africa, as well as joint ventureoperations in Botswana and Namibia with the governments of those countries. After sorting and


De Beers SABusiness Description

valuing the diamonds, the company sells the gems to clients, referred to as sight holders. On themarketing side, the DTC promotes diamonds to end consumers through advertising and othercampaigns.

Most DTC diamonds are sold through the London sales office. However, DTC South Africa, whichis wholly-owned by De Beers, sells diamonds to clients based in South Africa. Similarly, the jointventures DTC Botswana and Namibia DTC, 50:50 partnerships with the governments of Botswanaand Namibia, sell diamonds to clients for cutting and polishing in those countries.

De Beers Diamond Jewellers is an independently managed, 50:50 joint venture between the DeBeers group and Moet Hennessy Louis Vuitton (LVMH). The company’s store network is spreadacross the US (11), Europe (nine), the Middle East (three), Japan (nine), and East Asia (12).

Diamdel provides expertise and leadership in rough diamond sales and distribution. Originallyestablished in Antwerp in 1964, Diamdel supplies rough diamonds to a broad range of customers.The Hindustan Diamond Company (HDC) is an associated member of the Diamdel network, whichis a joint venture between De Beers and the Government of India.

An independently managed industrial diamond group, Element Six, is the world's leading supplierof high quality superabrasives and industrial diamond materials.These include synthetic and naturaldiamonds and complementary superabrasive cubic boron nitride (CBN). Diamond and CBN productsare mainly used in the manufacture of tools for applications including drilling, sawing, cutting, grinding,and polishing of different materials such as ferrous and non-ferrous metals, natural stone andconcrete, wood based materials, plastics, glass, and ceramics.

The product range also includes a group of chemical vapor deposition diamond products. Theseengineered materials are suitable for use in medical, optical, radio frequency, thermal management,and precision applications. Element Six is also an important manufacturer and supplier ofpolycrystalline diamond (PCD) for drill bits used in oil and gas well drilling.

Forevermark is a diamond brand from the De Beers family of companies.


De Beers SABusiness Description

HISTORY

De Beers' origins date back to 1880 when it was formed as De Beers Mining. In 1888, De BeersConsolidated Mines (DBCM) was formed by the merger of two South African companies: KimberleyCentral Mining Company and De Beers Mining.

In the late 1920s, the diamond industry was in a catastrophic state with too many diamonds and toofew buyers. Sir Ernest Oppenheimer, Chairman of De Beers, began organizing the diamond industry,by essentially offering to buy all the diamonds on offer throughout the world in order to support theprice. In 1934, he grouped the major producers and the London Syndicate, the company's marketingarm and precursor to Central Selling Organization, into one organization, which bought up all thediamonds, mined, and sold them at its 10 sites at a rate the markets could absorb. Diamondssurpluses were kept in stock until demand increased.

Later in 1952, DBCM formed the De Beers Investment Trust, to hold the significant portfolio ofindustrial, gold and related mineral, and agricultural interests that the company had built up to diversifyits income streams. In the following year ASEA (later renamed Element Six) produced the firstsynthetic diamond, but failed to take out the first patent rights. General Electric announced thesuccessful production of synthetic industrial diamonds in 1955, and registered exclusive patentrights. In 1956, DBCM established the Adamant Research Laboratory to intensify research intodiamond synthesis. In 1958, De Beers produced its first synthetic diamond, and commissioned asynthesis plant the following year.

The Orapa pipe (a pipe is a vertical, cylindrical matrix, of intrusive igneous origin in which diamondsare found), the second largest pipe in the world with a surface diameter of 262 acres, was discoveredin Botswana, in 1967. In 1969, Debswana was set up as a joint venture between the Governmentof Botswana and DBCM to develop the mine. Five years later, the company's geologists discoveredthe Jwaneng pipe in southern Botswana.

In 1979, the Argyle pipe was discovered in the north of Western Australia; and in 1980, DBCMannounced the discovery of cluster of kimberlites at Venetia in South Africa's Northern Province, afew kilometers south of the Limpopo River.

In 1990, De Beers Centenary was registered in Switzerland to manage De Beer investments inDebswana, Namdeb, and Minorca.The following years saw the company fall in value and lose someof its business.To combat this, DBCM embarked upon a fundamental strategic review of its businessfor much of 1998 and 1999. The review resulted in three major programs and changes. To reflectthese changes, the company's Central Selling Organization, the company's marketing arm, wasre-launched as the Diamond Trading Company (DTC), in 2000.

DBCM also embarked upon a vigorous acquisition program. In 1999, DBCM acquired the minorityinterests in DTC, making it a wholly-owned subsidiary. In 2000, the company purchased the SaturnPartnership, which held the rights to 50% of the pre-tax profits of its flagship Venetia mine in South


De Beers SAHistory

Africa. In the same year, DBCM acquired a 100% interest in the Snap Lake project in Canada'sNorthwest Territories, the company's first Canadian diamond mine. De Beers was formallyincorporated in Luxembourg, also in 2000.

In 2001, DBCM was acquired by DB Investments. Subsequently, De Beers officially de-listed fromthe Johannesburg Securities Exchange and the London Stock Exchange. De Beers and SouthAfrican National Parks (SANParks) signed an agreement, in 2003.The companies agreed to integrateparts of Venetia Limpopo Nature Reserve (VLNR), owned by De Beers, with Vhembe/ DongolaNational Park.

In 2004, De Beers signed an agreement with African Diamonds to explore for kimberlites in Botswana.In the same year, De Beers allied with Firestone Diamonds to explore for diamonds in Botswana.Further in 2004, the official opening of the combined treatment plant (CTP) at De Beers’ KimberleyMines took place. Subsequently in 2004, De Beers re-organized itself and as a result DBCM andthe DTC became the stand-alone companies within the De Beers group. In 2005, De Beers sold26% of its mining operations to Ponahalo Investment Holdings for $604.8 million.

In 2006, ALROSA and De Beers signed an agreement regarding diamond supply arrangements.After 2008 this agreement would cease to exist as per the commitment given to the EuropeanCommission. Further in 2006, De Beers was selected to establish a marine mine in the South AfricanSea Areas (SASA) off the west coast of South Africa. Subsequently in 2006, De Beers and ALROSAexamined opportunities to conduct diamond prospecting and exploration activities in Russia. In thesame year, De Beers sold its African mine of Koffiefontein Mine to Petra Diamonds.

In 2007, De Beers allied with the Government of Namibia for the sale of Namibia's diamonds throughthe Namibia Diamond Trading Company. The agreement would be effective till 2013. In the sameyear, De Beers concluded an agreement of sale in respect of its 50% interest in Gope ExplorationCompany. Further in 2007, DBCM agreed to sell Cullinan Diamond Mine as a going concern to thePetra Diamonds Cullinan Consortium (PDCC).The consortium comprised Petra Diamonds, Al RajhiHoldings (a Saudi-based investment company), and their empowerment partner, Thembinkosi MiningInvestments.

De Beers opened an advanced diamond sorting facility in Botswana, in 2008. In the same year, DeBeers officially opened its first two mines outside of Africa: Snap Lake and Victor Mines in Canada.Further in 2008, De Beers opened a new recovery plant at the Finsch mine. In mid 2008, PetraDiamonds acquired the Cullinan diamond mine from DBCM. Further in mid 2008, De Beers enteredinto a contract with the Government of Tanzania and Petra Diamonds (Petra) to sell its entire 75%equity shareholding and all of its claims over Williamson Diamonds (WDL) to Petra through the saleof 100% of Willcroft Company.

Later in 2008, De Beers converted seven of its old order mining rights to new order rights under theprovisions of the Minerals and Petroleum Resources Development Act no. 28 of 2002, and the Act’sRegulations of 2004. Towards the end of 2008, De Beers’ Voorspoed Diamond Mine in South Africawas officially opened.


De Beers SAHistory

In 2009, Debswana Diamond Company resumed production at Orapa, Letlhakane, and Jwanengmines which had been suspended since late 2008. In the same year, the shareholders of DebswanaDiamond Company approved the major extension project at the Jwaneng diamond mine. Further in2009, De Beers agreed to sell 70% share in the AK06 diamond deposit to Lucara Diamond, aCanadian junior diamond mining company, for $49 million in cash.

In 2010, Debswana Diamond Company along with Firestone decided to construct a modular tailingstreatment project (MTTP) at its Jwaneng mine. Subsequently in 2010, De Beers announced furtherexpansion of the Forevermark brand into a number of new markets. During the same period, DeBeers sold its interests in the dormant Jagersfontein Mine to the Superkolong Consortium. DebswanaDiamond Company launched the Jwaneng Mine's Cut-8 extension project towards the end of 2010.

In January 2011, Diamdel opened a new office in Israel. In the same month, DBCM entered into anagreement with Petra Diamonds to sell Finsch Diamond Mine as a going concern for a considerationof ZAR1.425 billion ($200 million) payable in cash.

In May 2011, DBCM entered into an agreement to sell Namaqualand Mines to Trans Hex in atransaction valued at ZAR225 million ($33.6 million). In the same month, Namdeb announced closureof its Bogenfels operation. Further in May 2011, the Government of the Republic of Namibia (GRN)and De Beers signed agreements which will allow GRN to increase its shareholding in De BeersMarine Namibia (DBMN) from 15% to 50%, deepening the partners’ joint commitment to diamondmining in Namibia.

In August 2011, Diamdel opened an office at Dubai located in the UAE. In September 2011, theGovernment of the Republic of Botswana and De Beers reached an agreement on a new 10 yearcontract for the sorting, valuing, and sales of Debswana Diamond Company’s diamond production.In October 2011, Diamdel opened a new office in Hong Kong.

In November 2011, Forevermark signed an agreement with Caratco, under which, Jewel Africa,Caratco’s retail outlet, will become the first exclusive authorized Forevermark Jeweler in South Africa.

In May 2012, Element Six started construction of the world’s largest synthetic diamond supermaterialsresearch and development facility. The £20 million ($32.1 million) investment near Oxford in the UKwill consolidate Element Six’s global innovation teams into one integrated center, developing apipeline of products for customers in industries from oil and gas drilling to machining and electronics.In the same month, Element Six opened its first US synthetic diamond manufacturing facility inSilicon Valley.

In August 2012, DBCM entered into an amended sales agreement with Trans Hex in respect ofNamaqualand Mines, under which DBCM will retain the Buffels Marine Mining Right (BMMR) andTrans Hex will acquire the balance of the Namaqualand Mines mining and prospecting rights andassociated environmental rehabilitation liabilities. In the same month, Anglo American completedits acquisition of a 40% shareholding in De Beers from CHL (representing the Oppenheimer familyinterests), thereby increasing Anglo American’s shareholding in De Beers to 85%, for a total cashconsideration of $5.2 billion.


De Beers SAHistory

In December 2012, Element Six acquired MegaDiamond’s cutting tool business from Schlumberger,which was then fully integrated into Element Six.


De Beers SAHistory

KEY EMPLOYEES

BoardJob TitleName

Executive BoardChief Executive Officer (CEO)Philippe Mellier

Executive BoardChief Financial OfficerGareth Mostyn

Executive BoardChairman, De Beers Consolidated Mines andExecutive Director

Barend Petersen

Executive BoardExecutive Director, Strategy and New BusinessBruce Cleaver

Non Executive BoardChairman of the Board of DirectorsCynthia Carroll

Non Executive BoardDirectorBrian Beamish

Non Executive BoardDirectorJoseph Iita

Non Executive BoardDirectorRene Medori

Non Executive BoardDirectorBoikobo B. Paya

Non Executive BoardDirectorSolomon Sekwakwa

Non Executive BoardDirectorPeter Whitcutt

Senior ManagementCEO, De Beers Consolidated MinesPhillip Barton

Senior ManagementCEO, De Beers CanadaTony Guthrie

Senior ManagementManaging Director, DebswanaJim Gowans

Senior ManagementCEO, Element SixCyrus Jilla

Senior ManagementCEO, ForevermarkStephen Lussier

Senior ManagementCEO, De Beers Holdings BotswanaDaniel Neo Moroka

Senior ManagementCEO, Diamond Trading CompanyVarda Shine

Senior ManagementManaging Director, NamdebInge Zaamwani-Kami

Senior ManagementHuman Resources DirectorAthene Van Mazijk

Senior ManagementManaging Director, Forevermark for JapanKazuo Nomura

Senior ManagementExecutive Head of Technical, Global MiningPatrick Lowery


De Beers SAKey Employees

KEY EMPLOYEE BIOGRAPHIES

Philippe Mellier

Board: Executive BoardJob Title: Chief Executive Officer (CEO)Since: 2011Age: 57

Mr. Mellier has been the Chief Executive Officer (CEO) at De Beers since 2011. Prior to this, heserved as Executive Vice President at the Alstom Group. He began his career at the Ford MotorCompany where he spent 19 years in various senior management positions. He joined Renault asa Senior Vice President, and in 2001 moved to Volvo to become Chairman and CEO at RenaultTrucks and a member of the Volvo Group Executive Committee.

Gareth Mostyn

Board: Executive BoardJob Title: Chief Financial OfficerSince: 2012

Mr. Mostyn has been the Chief Financial Officer at De Beers since 2012. He was appointed to theBoard of Directors at De Beers in 2012. Prior to joining De Beers, he served as the Head of CorporateFinance at Anglo American. Mr. Mostyn was with Anglo American since 2008, prior to which hespent 12 years at The BOC Group, a leading global gas and engineering company. He is a qualifiedChartered Accountant

Barend Petersen

Board: Executive BoardJob Title: Chairman, De Beers Consolidated Mines and Executive DirectorAge: 52

Mr. Petersen is currently the Chairman of the Board of Directors at De Beers Consolidated Mines(DBCM). He also serves as an Executive Director at De Beers. He is a Director at Anglo AmericanSouth Africa and Alexander Forbes Equity Holdings. He is a shareholder in Ponahalo Capital whichowns a 50% stake in Ponahalo Investments, the black economic empowerment partner at DBCM.He is also the Chairman at Sizwe Business Recoveries which he founded in 1997.

Bruce Cleaver

Board: Executive Board


De Beers SAKey Employee Biographies

Job Title: Executive Director, Strategy and New BusinessSince: 2011Age: 47

Mr. Cleaver has been an Executive Director of Strategy and New Business at De Beers since 2011.Prior to that, he had served as Commercial Director at De Beers from September 2005. Beforejoining De Beers, he was a Partner at Webber Wentzel, Africa's largest law firm, specializing incommercial matters.

Cynthia Carroll

Board: Non Executive BoardJob Title: Chairman of the Board of DirectorsSince: 2012Age: 56

Ms. Carroll has been the Non Executive Chairman of the Board of Directors at De Beers since 2012.She is also the Chief Executive officer at Anglo American. Before joining Anglo American in 2007,she was President and Chief Executive Officer at Alcan's Primary Metals Group. She is a BoardChairperson at Anglo Platinum and a member of the Board at BP.

Brian Beamish

Board: Non Executive BoardJob Title: DirectorSince: 2012

Mr. Beamish has been a Non Executive Director at De Beers since 2012. He serves as the GroupDirector of Mining and Technology at Anglo American. He is also a member of the Anglo AmericanSafety and Sustainable Development (S&SD) Committee, the Investment Committee, as well as theGroup Management and Executive Committees. He has more than 30 years of mining industryexperience in multiple commodities and geographies and has spent 20 years at Anglo Platinum,including four years as Operations Director between 1996 and 1999.

Joseph Iita

Board: Non Executive BoardJob Title: DirectorSince: 2002Age: 57

Mr. Iita has been a Non Executive Director at De Beers since 2002. He is also the PermanentSecretary of the Ministry of Mines and Energy Department of the Namibian Government. He is



currently a Director at Windhoek Fabrik, and is Chairman of the Board of Directors at TelecomNamibia.

Rene Medori


Dr. Medori has been a Non Executive Director at De Beers since 2007. He is the Finance Directorat Anglo American. Prior to joining Anglo American he worked at the BOC Group in France, the US,and the UK, for 17 years, serving as Finance Director there between 2000 and 2005. Mr. Medori isalso a Director at Scottish and Southern Energy and Anglo Platinum.

Boikobo B. Paya


Mr. Paya is currently a Non Executive Director at De Beers. He is the Permanent Secretary in theMinistry of Minerals, Energy, and Water Resources in the Government of Botswana. Mr. Paya hasserved on various boards and associations such as Botswana Geoscience Association, PerformanceImprovement Coordinator Forum, Water Utilities Corporation Board, Water Apportionment Board,and Botswana Power Corporation Board. He also served as a Commissioner at Limpopo Commission(Botswana, Zimbabwe, Mozambique, and South Africa).

Solomon Sekwakwa


Mr. Sekwakwa is currently a Non Executive Director at De Beers. He is the Permanent Secretaryat the Ministry of Finance and Development Planning in the Government of Botswana. He startedhis working career as an industrial planner and has held a number of senior positions since he joinedthe civil service in 1979. In 1998 he joined the Ministry of Finance and Development Planning ofSouth Africa as Principal Economist.

Peter Whitcutt



Board: Non Executive BoardJob Title: DirectorSince: 2012

Mr. Whitcutt has been a Non Executive Director at De Beers since 2012. He is the Group Directorof Strategy and Business Development at Anglo American. He was appointed Group Head of Financein 2003 and Chief Financial Officer of the Base Metals business in 2008 at Anglo American. He isa member of the Anglo American Investment Committee as well as the Group Management andExecutive Committees.

Phillip Barton

Board: Senior ManagementJob Title: CEO, De Beers Consolidated MinesSince: 2010

Mr. Barton has been the CEO at DBCM since 2010. He began his career at De Beers in 1988 asInternal Auditor of the Cullinan Diamond Mine and became Senior Audit Manager of Global Operationsin 1997. He has also served as Financial Manager of Group Exploration, Group Manager of InternalAudit, and Finance Director at DBCM.

Tony Guthrie

Board: Senior ManagementJob Title: CEO, De Beers Canada

Mr. Guthrie is currently the CEO at De Beers Canada. He has over 35 years experience in the miningand technical generalist fields including 17 years in the field of underground mines. He has heldmany senior management roles including Managing Director at Williamson Diamonds, and Chairmanat De Beers Marine and Debmarine Namibia. He is a fellow of the South African Institute of Miningand Metallurgy and the Institute of Quarrying, and is a professional certified engineer.

Jim Gowans

Board: Senior ManagementJob Title: Managing Director, DebswanaSince: 2011

Mr. Gowans has been the Managing Director at Debswana since 2011. Prior to this, he served asthe Chief Operating and Technical Officer at the De Beers Group. He began his career at De Beersas President at De Beers Canada in 2006. During his more than 30 years of experience, he hasheld senior roles at Cominco, Placer Dome, and Inco. Before joining De Beers, he was Senior VicePresident and Chief Operating Officer at Inco Indonesia. He is also a past President at the CanadianInstitute of Mining, Metallurgy and Petroleum (CIM), and the Mining Association of Canada.



Cyrus Jilla

Board: Senior ManagementJob Title: CEO, Element SixSince: 2008

Mr. Jilla has been the CEO at Element Six since 2008. Prior to this, he was UK Managing Partnerat global strategy consultancy Bain & Company. He began his career in corporate finance and assetmanagement at Schroders in 1991. Mr. Jilla is also a Director at De Beers Diamond Jewellers.

Stephen Lussier

Board: Senior ManagementJob Title: CEO, ForevermarkSince: 2009

Mr. Lussier has been the CEO at Forevermark since 2009. He joined De Beers in 1985 in theconsumer marketing division in London, as Market Controller for the US and Canada. From 1995to 2004, he worked at DTC, first as a Director and then as Deputy to the Managing Director. Priorto joining De Beers, Mr. Lussier worked at De Beers' advertising agency, NW Ayer in New York.

Daniel Neo Moroka

Board: Senior ManagementJob Title: CEO, De Beers Holdings BotswanaSince: 2010Age: 60

Mr. Moroka has been the CEO at De Beers Holding Botswana since 2010. Mr. Moroka served asCEO at BP in Botswana and as the Minister of Trade and Industry.

Varda Shine

Board: Senior ManagementJob Title: CEO, Diamond Trading CompanySince: 2005

Ms. Shine has been the CEO at Diamond Trading Company since 2005. Ms Shine joined De Beersin 1984, initially working in the Diamdel office in Tel Aviv before transferring to the DTC in London.She is a governing board member at the Diamond Empowerment Fund and honorary lifetime memberof the Israel Diamond Exchange.

Inge Zaamwani-Kami



Board: Senior ManagementJob Title: Managing Director, NamdebAge: 54

Ms. Zaamwani-Kami is currently the Managing Director at Namdeb. She has worked with theCommonwealth Secretariat and in private legal practice in London and Windhoek.

Athene Van Mazijk

Board: Senior ManagementJob Title: Human Resources DirectorSince: 2012

Ms.Van Mazijk has been the Human Resource Director at De Beers since 2012. In 2008, she joinedCadbury in their Middle East and Africa Region as the Human Resource and Corporate AffairsDirector. After the acquisition of Cadbury by Kraft she was asked to lead the human resource teamfor Kraft Central Eastern Europe, Middle East, and Africa, based in Vienna. Before joining Cadbury,she worked at Bank of South Africa and Aon South Africa.

Kazuo Nomura

Board: Senior ManagementJob Title: Managing Director, Forevermark for JapanSince: 2012

Mr. Nomura has been the Managing Director of Forevermark for Japan since 2012. He has 31 yearsof industry experience, the last 17 of which are within the De Beers group. He has also served asthe Retail Director at De Beers.

Patrick Lowery

Board: Senior ManagementJob Title: Executive Head of Technical, Global MiningSince: 2012

Mr Lowery has bee the Executive Head of Technical for Global Mining at De Beers since 2012. Hebegan his career at Anglo American 34 years ago as a trainee metallurgist in the then gold anduranium division. He has held a number of operational and general management roles across AngloAmerican including Metallurgical Manager of Kimberley at Koffiefontein, Operations Manager at theBindura Nickel Corporation and General Manager at Loma de Niquel, Consulting Metallurgist forAnglo American Platinum, and more recently as Global Head of Asset Optimization.



MAJOR PRODUCTS AND SERVICES

De Beers is the largest diamond mining and marketing company in the world. The company's key product is diamonds.


De Beers SAMajor Products and Services

REVENUE ANALYSIS

Not available.


De Beers SARevenue Analysis

SWOT ANALYSIS

De Beers is one of the largest diamond producers of the world.The company produces and marketsapproximately 35% of the world’s supply of rough diamonds by value. De Beers' market leadershipposition gives it immense bargaining power. However, the company is threatened by the risingdemand for counterfeit diamonds, which could pull down demand for the company's diamonds.

WeaknessesStrengths

Significant debtIndustry leaderStrong brand identity

ThreatsOpportunities

Counterfeit diamondsCut 8 extension project at Jwaneng mineThe Black Economic Empowerment CharterExpansion into emerging markets

Strengths

Industry leader

De Beers is one of the largest diamond producers of the world.The company produces and marketsapproximately 35% of the world’s supply of rough diamonds by value. Additionally, De Beers has aglobal marketing network through its subsidiary Diamond Trading Company (DTC). DTC suppliesabout 35% to 40% of all rough diamonds on the market.

In FY2011, production of the company was 31.3 million carats. A combination of the company'sleading market share and significantly large scale of production has led to a significant control overthe global diamond trade. This has given the company considerable control over the pricing ofdiamonds. De Beers' market leadership gives it immense bargaining power.

Strong brand identity

De Beers has built a strong brand identity and endorsed celebrities to improve the brand awareness.Captions like “A Diamond is Forever” and “living up to diamonds” have successfully associated thecompany's brand with premium gems. De Beers has set-up a series of high-end retail stores aroundthe world to promote its brand. By the end of FY2011, De Beers Diamond Jewelers’ store networkincluded 44 stores in 15 countries, and Forevermark was available in 658 retail doors across ninemarkets, having formally launched in India and the US during the year. Moreover, De Beers is alsosub-franchising its brand, by permitting its name to be used by other resellers, to promote its brandname.


De Beers SASWOT Analysis

The company maintains a strong focus on marketing. The demand for De Beers' diamonds haswitnessed a growth through the promotion of ideas such as Journey Diamond Jewellery for theholiday season.The Trilogy campaign has continued its success in the US and Japan with a significantgrowth year-on-year. DTC, a subsidiary, has launched its Forevermark program in Japan, China,and India to promote consumer confidence in these regions. De Beers' strong marketing effortsreinforce its brand and unique identity.The company's strong brand name enhances customer recalland improves market penetration opportunities.

Weaknesses

Significant debt

The company has substantial debt. As of December 2011, the company’s net debt stood at $1.26billion. High debt obligations make it more difficult for De Beers to pay principal and interest withrespect to its debt obligations. It requires the company to dedicate a substantial portion of its cashflow from operations for interest, principal, and lease payments. It also reduces the company’s abilityin raising additional capital to pursue its expansion plans. In addition, high financial obligations alsolimit De Beer’s flexibility in planning, and in reacting to changes in business and industry.

Opportunities

Cut 8 extension project at Jwaneng mine

De Beers and the government of Botswana will spend as much as $3 billion over the next 15 yearsto expand the Jwaneng diamond mine. In 2010, the company began work on the Cut-8 extensionproject at Jwaneng mine. Jwaneng mine is owned by Debswana (a joint venture between De Beersand the government of Botswana) and is the largest diamond mine in the world by production value.Jwaneng mine contributes about 60% to 70% of Debswana's total revenue. The project will extendthe life of Jwaneng mine to at least 2025. Currently, Jwaneng is mining to a depth of 330 meters,which will increase to 624 meters by 2017.

Further, demand for diamonds is expected to increase in the long term, especially in the developingmarkets of China and India with increasing purchasing power of the people in these countries. Inthe recent past there have been no new major diamond discoveries, and the growing demand islikely to significantly outpace what is forecast to be lower levels of diamond supply for many yearsto come.

This expansion project will ensure profitable and continuous production at the mine until at least2025. This stable and continuous production along with increasing demand for diamonds providesa strong growth opportunity for the company.

Expansion into emerging markets



De Beers is focusing on expanding its proprietary diamond brand, Forevermark, throughout Asiaand other emerging markets. The brand is currently available in 348 stores globally. It continues itsexpansion into the core retail markets of China, Hong Kong, and Japan, and has recently beenlaunched in India, Singapore, and the Caribbean. During the first half of FY2011, De Beers DiamondJewellers (De Beers’ joint venture with LVMH) announced the strategic launch of the brand in Chinawith the opening of its first mainland store in Beijing, its first store in Kazakhstan in Almaty, and anew store in Dubai at Dubai Mall. Further, in August 2011, Diamdel opened an office in Dubai. InOctober 2011, Diamdel opened a new office in Hong Kong. The increasing business operations inemerging markets are likely to drive the revenue growth further.

Threats

Counterfeit diamonds

Despite continuing consumer demand for genuine diamonds, new techniques for creating counterfeitdiamonds are emerging in the global market. Moissanite, a laboratory produced alternative todiamonds, has been introduced to the market in recent times. Unlike the majority of other processes,the Moissanite product is very hard to detect as fake. It is almost as hard as diamonds, dispersesmore light, and has fewer imperfections. Costing less than one tenth of diamond prices, Moissaniteis providing an affordable alternative to diamonds in a time when demand is increasing for low costfashion accessories. High pressure high temperature (HPHT) treatment is also posing a significantthreat, turning low grade diamonds into those of the highest clarity.These counterfeit products coulderode revenue growth rate for De Beers.

The Black Economic Empowerment Charter

De Beers faces a challenge in meeting the requirements of the Black Economic EmpowermentCharter or the BEE Charter proposed in 2003 to convert existing mineral rights to new order mineralrights. The requirements of the charter, which affects all mining companies active in South Africa,have been universally accepted by the industry. The charter came into effect in May 2004.

One of the key elements of the charter is that the equity participation will be determined either ondirect equity BEE ownership or on a units-of-production basis. The requirement is 15% blackownership within five years and 26% within 10 years from the date of implementation. There is alsoa target of 40% historically disadvantaged South African (HDSA) participation, including 10%participation by women within five years from the date of implementation. Abiding by the charter,the company’s South African operations are 26% owned by Broad Based Black EconomicEmpowerment partner Ponahalo Holdings. De Beers could have to put further measures in placeto ensure compliance with the charter. The company could face a challenge in balancing the twinaspects of structure and control.



TOP COMPETITORS

The following companies are the major competitors of De Beers SA

Rio TintoBHP BillitonAlrosaDiavik Diamond MinesStornoway Diamond Corporation


De Beers SATop Competitors

COMPANY VIEW

A statement by Philippe Mellier, Chief Executive Officer at De Beers, is given below. The statementhas been taken from the company’s operating and financial review for FY2011:

I joined De Beers in the middle of 2011. Already an admirer of the company from afar, the past sixmonths have given me an intimate understanding of what makes De Beers tick. Today, after havingtravelled from our mines to our retail stores – with many stops in between, and visiting geologistsand jewellery designers, I am even more excited about De Beers’ future.

Safety

If the product we sell is to continue to hold enduring value, then the way in which we mine it mustreflect our organization’s values. Chief among them is to show we care about our colleagues. In2011, our safety performance as a company simply wasn’t good enough. Despite an overall reductionin our lost-time-injury frequency rate (LTIFR) to 0.15 (0.24 in 2010), we regrettably reported sevenfatalities during the year, six of which were the result of vehicle accidents. No diamond is worth alife, and I am overseeing a full review to better understand and manage our safety culture. We willtolerate nothing less than zero harm.

Performance

2011 was an exceptional year for De Beers with a 21 percent increase in EBITDA to US$1.7 billion(2010: US$1.4 billion), and free cash flow of US$734 million (2010: US$943 million). Strong DTCprice growth of 29 percent from 1 January to 31 December 2011 drove our second highest level ofsales ever (US$6.5 billion), a 27 percent increase over 2010 (US$5.08 billion). At the same time,De Beers’ third-party debt reduced to US$1.3 billion (December 2010: US$1.8 billion), and third-partygearing to 20.9 percent (December 2010: 29.5 percent).

Market

With strong consumer demand for diamond jewellery – led by China, India and the US – and a lowerthan historical level of global diamond production, polished and rough diamond prices grew rapidlyduring the first half.

2011 was a year of two halves, however, and the extraordinary growth seen in the first half cooledduring the latter half of the year. The global economic uncertainty impacted the rate of growth asconsumer buying slowed and liquidity in the cutting centres was restricted. Correspondingly, by theend of the year, DTC prices had receded slightly from the highs seen in the middle of the year.Nevertheless, on the whole, 2011 will be remembered as an outstanding year for consumer demandgrowth – estimated at between 11-13 percent for the full year – and DTC rough diamond price growth.

Production and projects


De Beers SACompany View

During 2011, De Beers continued to produce in line with demand from our Sightholders. As with themarket, our production strategy shifted between the first and second halves of the year. Our full yearproduction of 31.3 million carats was down on 2010 (33.0 million carats).

During the first half of 2011, our operations were confronted with a number of challenges, includingexcessive rainfall in southern Africa, maintenance backlogs, poor contractor performance, skillsshortages, and strikes. However, we were able to remain focused on carat production and produced15.5 million carats (H1 2010: 15.4 million carats). In the second half of the year, as it became clearthat the market was beginning to cool, we made the conscious decision to focus our resources onmaintenance and waste-stripping backlogs. By addressing these issues when we did, we have putour mines in a strong position to ramp up production, as Sightholder demand dictates, in 2012.

De Beers continues to work to secure future production, and we have made progress at our majorprojects in Africa and Canada. In Botswana, the Jwaneng Mine Cut-8 extension project is progressingsatisfactorily, with more than 40 million tonnes of waste having been stripped to February 2012, andinfrastructure construction more than 90 percent complete. In South Africa, Finsch Mine was soldas a going concern to a Petra Diamonds-led consortium, providing capital for priority projects likeVenetia Underground, which is currently in feasibility study and scheduled for consideration by theDe Beers Consolidated Mines board in 2012. In Canada, an Optimization Study at Snap Lake Minewas completed in mid-2011, securing a mining solution to economically access this promising, butchallenging ore-body, and thereby achieve its forecast 20-year life of mine. The EnvironmentalImpact Statement for Gahcho Kue has also been submitted for review.

Brands

Our value-creating downstream businesses continued their expansion plans, with a particular focuson China. After posting good sales growth across all regions, and opening stores in Beijing, Tianjin,Dalian and a second Hong Kong store in 2011, De Beers Diamond Jewellers is planning furtherexpansion in China. Forevermark continued its expansion both in its existing markets of China, HongKong and Japan, and launched in India and the all-important US market. Forevermark is now availablein 658 retail doors across nine markets.

Agreements

While global economic conditions beyond our control are likely to create uncertainty in the shortterm, we have focused on insulating our business from future shocks. Our strong balance sheet,significantly improved debt situation – a new US$2 billion multicurrency international credit facilitywas concluded in October on favorable terms – and progress in cash conservation, position us toweather market tremors on the downside and exploit growth opportunities on the upside.

In September, we announced a new 10-year contract for the sorting, valuing and sales of Debswana’sdiamond production with our joint venture partner, the Government of the Republic of Botswana. Aspart of the agreement, De Beers will transfer its London-based rough diamond aggregation andsales activity to Botswana by the end of 2013. From its new base in Botswana, the DTC will aggregateproduction from De Beers’ mines and joint venture operations worldwide, and sell to local and



international Sightholders. The agreement is the longest sales contract agreed between the twopartners and underpins the long-term future of one of the world’s most successful public-privatepartnerships. It has the potential to transform Botswana into a leading diamond trading andmanufacturing hub, while securing De Beers’ long-term and uninterrupted access to the largestsupply of diamonds in the world.

Towards the end of 2011, news came that the Oppenheimer family had agreed to sell its 40 percentstake in De Beers to Anglo American, subject to the fulfillment of certain conditions precedentincluding various regulatory and other approvals. While the year ahead will provide us with ampletime to thank Nicky and Jonathan for the contribution their family has made to both De Beers andthe diamond industry over nearly a century, we are excited by the prospect of utilizing the skill,resource and expertise that one of the world’s leading natural resource companies will bring.

Outlook

In spite of uncertainty, and barring a global economic shock, we expect to see continued growth inglobal diamond jewellery sales, albeit at lower levels than the exceptional growth seen in 2011. Thiswill be driven by the overall strength of the luxury goods market, improving sentiment in the US (thelargest diamond jewellery market), continuing growth in China, and the positive impact of the 2011polished price growth on retail jewellery prices.

On the production front, we will continue to prioritize waste-stripping and maintenance backlogs,and we therefore do not expect a material increase in carat production in 2012. This focus, whichbegan in H2 and will continue driving Q1 2012, will position De Beers to ramp up profitable caratproduction, as Sightholder demand dictates. In the medium to longer term, we continue to believethe industry fundamentals are positive, with consumer demand, fuelled by the emerging markets ofChina and India, outpacing what will likely be level carat production.



LOCATIONS AND SUBSIDIARIESHead Office

De Beers SACNR Diamond Drive and Crownwood RoadThetaJohannesburg 2013ZAFP:27 11 374 7000http://www.debeersgroup.com

Other Locations and Subsidiaries

De Beers Consolidated MinesDe Beers UK LimitedKimberley 830017 Charterhouse StreetZAFLondon

EC1N 6RAGBR

Debswana Diamond CompanyDe Beers BotswanaGaboroneGaboroneBWABWA

NamdebDe Beers CanadaWindhoek 9000900-250 Ferrand DriveNAMToronto

M3C 3G8OntarioCAN

De Beers IndiaDe Beers Societe AnonymeAdvanced Business CentreBP59183 Maker Chambers VIL-2014 Luxembourg CityNariman PointLUXMumbai 400 021IND


De Beers SALocations and Subsidiaries

DeBeers

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