De Beers gets investor backing to raise $1bn

De Beers today won the backing of its three shareholders, Anglo American, the Government of Botswana and the Oppenheimer family, to secure a $1 billion (£4.02 million) fundraiser.

The diamond miner lined up the rights issue to cut its net debt, which stands at around $3 billion.

De Beers has to pay its banks about $1.5 billion by March but has been suffering from the effects of the recession.

Retail and consumer demand bombed last year, forcing it to mothball mines in South Africa and Canada, and lay off almost a quarter of its workforce to prevent piles of uncut diamonds from flooding the market and hitting prices.

The full impact of the downturn on De Beers was laid bare today, as it posted a loss of $220 million for 2009. Sales sank to $3.8 billion from $6.9 billion a year earlier.

But it claims the outlook was much brighter. The company said: "Sentiment has improved markedly from a year ago.

"Demand for rough diamonds has been much improved and consumer demand for diamond jewellery is beginning to recover, driven in part by the strength of the developing markets of China and India."

De Beers added a note of caution, saying it expected only a gradual increase in production levels, sales and prices this year.