Surat Manufacturers Form Rough Buying Cooperative

More than 200 Surat-based diamond manufacturers decided to invest in a rough diamond sourcing consortium. The cooperative intends to raise more that $200 million to buy rough directly from producing countries and mining companies and sell the goods in Surat to their members and non-members.

The Surat Diamond Sourcing (India) Ltd (SDSL) will reportedly open buying offices in producing countries such as South Africa, Botswana, Namibia, Tanzania and Zimbabwe.

The is the second such consortium formed in India. The first Diamond India Limited (DIL) was formed by Mumbai-based diamond firms a few years ago and is actively sourcing rough diamonds for its members.

The 200 founding members would like to see the rest of Surat's manufacturers join the initiative, giving small and mid-size operations a better opportunity to buy rough.

The majority of India's diamond supply comes from De Beers, Rio Tinto and Alrosa. First hand clients of these companies are few, leaving the rest to compete for rough diamonds in the secondary market where they will pay a premium that could be as high as 20 percent or even more on the goods.

Last week's tender in Zimbabwe was mostly picked up by Indian buyers. The rest of Zimbabwe's stockpile, believed to be soon approved for export, is being eyed by DIL and SDSL. Ashit Mehta of Blue Star, a founding member of SDSL, told The Times of India "We want to begin our operations with the direct sourcing of rough diamonds from Zimbabwe. The Zimbabwe government has a stockpile of $2 billion worth of rough diamonds and we want to purchase it all."

They are aiming even higher, expressing hopes to become direct clients of Rio Tinto and Alrosa.