BHP Billiton, diamond unit saw earnings slump as a result of lower realized diamond prices and higher production costs in spite of record earnings in the first quarters. EBIT (Earnings Before Interest and Taxation) at its Diamonds and Specialty Products unit fell 36% to $261 million in the half-year period ended December 31, 2005, compared to the same period in 2004.

BHP Billiton said diamond prices during the second half of 2005 fell 19.6% as a result of lower carat quality, higher costs in relation to the processing of lower grade material and lower diamond volumes, which fell 3.1% from the corresponding period. Half year production at Ekati fell by 21.1%, compared to the previous year period. The second half of the 30 June 2006 financial year, will continue to be negatively impacted by the processing of lower grade and lower value material at Ekati, BHP Billiton said.

Profit from operations at its Diamonds and Speciality Products unit came in at $223 million for the first half financial year; $134 million lower than the corresponding period.
The Group’s income jumped 48% to a record $4.36 billion, which prompted the world’s largest miner to increase its dividend by 30% and buy back $2 billion of shares.