De Beers, the world's largest diamond producer, returned to a profit in 2010 as production rose 34 per cent amid a strong recovery in diamond prices, although it remains cautious about the market this year.
It posted net earnings after one off items of $598m (£372), compared with a net loss of $220m in 2009, after recovering a better-than-anticipated 33m carats. De Beers had targeted production of about 30m to 31m carats for 2010.
"The price of rough diamonds has recovered strongly as confidence returned to most parts of the diamond pipeline," the company said. "Notwithstanding this, the industry is not back to pre-recessionary levels in terms of production or sales and a high degree of global uncertainty remains."
De Beers said it plans to increase production to 38m carats this year, approaching full production which will, as planned, be achieved in 2012.
De Beers is 45 percent owned by mining group Anglo American, 40 per cent by South Africa's Oppenheimer family and 15 per cent by the Botswana government.
Anglo American, which is due to report its full-year earnings on 18 February, said it will post underlying earnings of $302m for the year from its investment in De Beers.
"While the directors remain cautious about the diamond market in 2011, continued positive growth is expected, albeit at a lower rate," De Beers said.
"After a better than expected Christmas retail season, the U.S. market is expected to continue its recovery and the exceptional growth seen in China and India is expected to be sustained," it added.
The United States is the world's biggest market for diamond jewellery with about 40 per cent of the world total, while China and India are the fastest growing countries in terms of diamond jewellery consumption.
De Beers did not comment on its search for a new chief executive after its previous chief executive's surprise departure in July.