* Natural diamonds seen remaining dominant
* Synthetic market getting bigger
* Lower diamond earnings after currency effects, cost increases
By Barbara Lewis
LONDON, July 26 (Reuters) - Anglo American unit De Beers expects its purchase of Canada's Peregrine Diamonds, its first upstream diamond acquisition since 2000, to be completed in a month to six weeks' time. Only then can it really start sizing up the asset.
Peregrine is the sole owner of the Chidliak project on Baffin Island in northeastern Canada. While preliminary assessments of Chidliak's mineral reserves have been done, the facility's overall ouput potential is unproven.
De Beers CEO Bruce Cleaver said in an interview on Thursday it could take "a few years to prove the resource", but work would begin on doing so once the 107 million Canadian dollars ($82 million) transaction is completed by around September.
The world's largest diamond producer by value said the acquisition, announced last week, underlined its commitment to natural diamonds even after it broke with tradition earlier this year with a plan to sell synthetic gems for jewellery.
Demand for natural diamonds, which last year made up some 16 percent of Anglo American's underlying EBITDA, is listed in the results statement as one of the group's "principal risks and uncertainties".
There is also always a risk the assets that provide the supply will disappoint.
The company's last acquisition of an upstream diamond asset was in 2000 when it bought Winspear Diamonds, which owned Snap Lake. De Beers flooded Snap Lake in Canada's Arctic in early 2017 after failing to find a buyer for the mine that proved to be unprofitable.
Anglo American CEO Mark Cutifani said a leaner, reformed company is focused on efficiency and its deals so far this year, including Peregrine, will add value to the company.
In first-half results announced on Thursday, diamond EBITDA lagged the group's wider performance.
Year-on-year, diamond EBITDA (earnings before interest, tax, depreciation and amortisation) was 9 percent lower, while the overall Anglo American group reported an 11 percent rise.
Reasons for the drop included currency effects and higher costs.
Cleaver said the outlook for diamonds was positive overall, especially in the United States, the biggest market, which is also the focus of De Beers' move into synthetic stones. Sales of factory-grown gem quality diamonds under the brand Lightbox begin there in September.
Cleaver said real diamonds remain by far the bigger and more valuable market, although synthetic diamond jewellery sales are increasing.
"I think it (synthetics) will make us a profit. It's a nice little business to have," he said.
$1 = 1.3063 Canadian dollars Additional reporting by Susan Taylor in Toronto; Editing by Jan Harvey