De Beers takes big charge on Snap Lake mine

International diamond company De Beers took a $965-million US charge to cover rising costs associated with its Snap Lake mine in the Northwest Territories.

The South African company said Friday the charge pushed it to a loss of $521 million US in 2007, compared to a profit of $730 million US a year earlier.

The company said that in light of increases in the values of the Canadian dollar against the U.S. dollar, fuel, labour and capital costs because of construction challenges at Snap Lake, "the directors believe that it is prudent to make an impairment against the value of the group’s Canadian assets of $965 million US."

"The highly experienced Canadian management team is focusing on improving the long-term economics of these operations given the impact of the continuing strength of the Canadian dollar," De Beers said in a release.

The Snap Lake mine is about 220 kilometres northeast of Yellowknife.

Diamond sales for 2007 were $6.42 billion US, down from $6.63 billion US year-over-year.

The company said its 2008 outlook is tempered by a high level of uncertainty over world market conditions.

"The economic conditions in the U.S. could continue to impact consumer diamond jewelry sales through the first half particularly at the lower end," said De Beers.

"Nevertheless, we expect strong demand from China, India and the Middle East to sustain pricing for larger and better quality diamonds."