De Beers develops ‘smartest’ rough diamond distribution

Mathew Nyaungwa

De Beers recently said that it will start providing customers of its rough diamond auctions with an opportunity to determine the volume of goods they wish to purchase, over a given period, through the introduction of forward contract sales.  
It said that it would continue to hold spot auction events that provide customers with additional flexibility to purchase the type and quantity of the goods they need.

About 10 percent of the company’s rough diamonds are sold through its auction platform.

The auction product range included special and exceptional stones and differs from diamond boxes the company sells to sightholders.

The move would take effect from November 2013.

De Beers group media relations manager Lynette Gould told Rough & Polished that with their two sales channels – Global Sightholder Sales (formerly DTC) and Auction Sales (formerly Diamdel) – they believed that they had the “smartest” rough diamond distribution system in the world.

She said in the past, Auction Sales were purchasing up to a maximum of 10 percent supply every cycle from De Beers’ global sightholder sales in the form of boxes, and creating auction lots for their customer base.

However, Auction Sales were unable to offer the consistency and regularity aspect at auctions which is very important to customers, as witnessed through feedback received over the last few years,” she said.

Forward contract sales will allow customers to determine the volume of products they wish to buy regularly over a period of time in order to meet their unique business requirements.

On how De Beers would coordinate with sightholders, taking into account that they were allowed to take part in tenders run by Auction Sales, Gould said any sightholder, who was a registered customer of Auction Sales, would be eligible to apply for forward contracts.

She said the Singapore move would also further enhance De Beers’ compelling proposition to a diversified global customer base, support their position as the leading distributor of rough diamonds via online auctions.

De Beers believed that while having a strong presence in the mature markets of Antwerp and Tel Aviv which it intends to maintain at current levels, Auction Sales had been looking at ways to focus on and improve its reach in the emerging markets of Asia and Asia Pacific over the last few years.

This move, while having no impact on customers in terms of their relationship with Auction Sales in the markets of Antwerp, Tel Aviv, Dubai and Hong Kong, is one which will allow us to strengthen our ability to understand and meet the evolving needs of customers in the emerging trading and manufacturing markets of India and China,” she said.

Some critics said De Beers was too enthusiastic or optimistic about the growing Asian market.

However, Gould said while the Chinese market was adjusting to new lower economic growth rates, De Beers expected to see above average growth rates for diamond jewellery there.

Conditions in India and Japan remain subdued, not least due to the continuing volatility of the local currencies,” she said.

Despite the fragility of the world economic recovery, base macro-economic conditions are generally supportive of global growth this year, slightly ahead of 2012.

We are still of the view that China, Hong Kong, Taiwan, India and Gulf are expected as a group to grow at a stronger rate than the traditional diamond markets reaching and perhaps surpassing the share of the US market for diamond jewellery by 2017-18.

Source Rough&Polished