THE STATE OF THE INDUSTRY REPORT.

De Beers Chairman Nicky Oppenheimer releases his annual statement, in which he reviews the state of the company and the industry over past year. But with De Beers about to go private, this may be last edition of the statement in its traditional format.

For decades already, the "Chairman's Statement," which accompanies the annual report of the De Beers Group, has functioned as a formal state of the industry address for the diamond business. The latest edition, which was released in April together with the 2000 annual reports of De Beers Consolidated Mines and De Beers Centenary, is no different.

But it may be the last of the series, at least in its current format. If the planned purchase of De Beers by DB Investments--a consortium involving the Anglo American Corporation (AAC), the Oppenheimer family and Debswana--goes ahead, the diamond conglomerate will cease being a publicly trading company, and consequently will no longer be subject to stringent reporting requirements. For its part De Beers has said that it will continue keeping the industry up to date with the state of the company, but how exactly this will be done is still an open question.

Following are extended excerpts from the most recently published statement, prepared by the De Beers chairman, Nicky Oppenheimer.

The Millennium year was in many ways a memorable one for De Beers--perhaps the most extraordinary, and certainly one of the most eventful in the history of a company now well into its second century of operations.

It began, with the promise of continued growth in the world's biggest diamond market, the United States, which recorded a 10 percent increase in diamond jewelry consumption in the first six months. It produced record sales for De Beers and it saw the company initiate important internal change and confront major external challenges to itself and the industry it leads.

A year later, shareholders are debating an offer that will, if accepted, involve the most profound change in the company's history; and the world is debating whether the slide on United States, European and Japanese stock markets presages or reflects an American recession and a contraction of the global economy.

2000 was an exceptional year as the diamond's popularity as the Millennium gift of choice and strong economic growth, led by the United States, translated into De Beers' sales of $5.67 billion. On the back of this, the company enjoyed an operating cash flow of $2.24 billion and was able to declare an 84 percent dollar increase in …