Defined as part of an 18 month pilot plan, Diamond Trading Company (DTC) Sightholders were informed today by DTC CEO Varda Shine about what De Beers called a "distribution update."

 

According to the company, the new application for the upcoming 2012-2015 contract period will be simplified and will require just one Contract Proposal Questionnaire (CPQ) per applicant to cover multiple categories of goods – instead of filling an application for each category, as it was in the past.

 

In regards to the Intention to Offer (ITO), De Beers will propose enhancements to it, adding that "The DTC will be replanning future ITO allocations to better reflect individual Sightholder demand."

 

The company is trying to reassure clients that the DTC will not add tender sales of its goods, saying, "De Beers will continue to focus on the ITO as the primary method for distributing De Beers’ rough diamonds."

 

Diamdel will transfer more of its allocation into the auction format and DTC Sightholders will be able to participate in Diamdel auctions starting in October. As of April 2011, the circle of clients will then be expanded to include "further qualifying diamantaires." The DTC ensured Sightholders that this will not impact on their ITO allocations.

 

DTC Executive Director of Sales & Sightholder Services, Mahiar Borhanjoo, told IDEX Online that by participating in Diamdel's auctions, Sightholders will have access to goods they couldn't buy before.

 

In what is no doubt a major change in policy, De Beers decided that Diamdel clients "who demonstrate consistently strong demand for certain categories of rough," could be invited to submit a CPQ at yearly stages during the three year contract and, if successful, would be appointed as a DTC Sightholder.

 

This means that, if the pilot is successful, they will become Sightholders after the contract period has started.

 

Click here for anlysis and an IDEX Online interview with Mahiar Borhanjoo about the proposed changes.

 

Full text of the De Beers release:

 

DE BEERS GROUP DISTRIBUTION UPDATE

 

London – 23 August 2010: De Beers Group (De Beers) today provided an update on the upcoming Supplier of Choice (SoC) application process, and the continued evolution of the Diamdel distribution model. 

 

Diamond Trading Company: De Beers will continue to focus on SoC as the primary method for distributing De Beers’ rough diamonds, and will be proposing enhancements to the Diamond Trading Company’s (DTC) Intention to Offer (ITO) process.  The DTC will be streamlining the SoC application process for the 2012-15 contract period, to make it simpler, quicker and more efficient for all participants.  This will include requiring just one simplified Contract Proposal Questionnaire (CPQ) per applicant to cover multiple categories of goods.  In addition, during the new 3-year SoC contract period the DTC will be replanning future ITO allocations to better reflect individual Sightholder demand in the preceding ITO period.

 

Diamdel: Following the success of its rough diamond auction platform over the past 2½ years, Diamdel will continue to transfer more of its allocation into the auction format whilst seeking to provide wider market access. While Diamdel auctions will continue to represent a relatively small proportion of De Beers’ overall sales of rough diamonds, existing Diamdel customers, DTC Sightholders and, over time, the wider market, will all be able to participate in the Diamdel auctions. The ability for DTC Sightholders to participate in Diamdel auctions will commence in October 2010 and will be extended to further qualifying diamantaires (in addition to existing Diamdel customers1 and DTC Sightholders) from April 2011. This will not impact on DTC Sightholders’ ITO allocations.

 

As part of the innovations anticipated in the new 2012 - 15 SoC contract period, it is envisaged that Diamdel clients who demonstrate consistently strong demand for certain categories of rough at the Diamdel auctions will, subject to availability, have the opportunity to compete for an ITO for those goods during the course of the 2012 - 2015 SoC contract period by being invited to submit a mid contract CPQ. 

 

These pilot plans constitute part of the continued evolution of De Beers’ rough diamond distribution model and are subject to ongoing assessment by De Beers and stakeholder feedback.

 

Further details will be communicated throughout Q3 and Q4 2010.

 

1 Diamdel customers as of 22 August 2010