'Substantial Reduction in Rough Supplies' at London Sights

2011 was an amazing year, DTC CEO Shine (above)

(IDEX Online News) – While 2011 was described as an amazing year for De Beers by Diamond Trading Company CEO Varda Shine, the 66 companies that will have a London Sight will probably find 2012 somewhat less exciting.

"We will have lower availability in London, seeing a substantial reduction in supply," Shine told IDEX Online in the middle of a busy day. The DTC was in the process of calling the companies that applied for the 2012-2015 Supplier of Choice contract, letting them know if they are on the list, or not.

The reduction of supply is the result of lower production, estimated at 40 million carats in 2012, as well as commitments made by De Beers to supply more of its goods in the countries where it mines for diamond, mainly Botswana and Namibia. These commitments are part of a continued drive to support beneficiation in those countries.

The new Sightholders list has 72 companies and 112 sights, meaning that a growing number of firms will have more than one Sight.

Of the 72, 66 applicants have qualified for supply in London (unchanged from the current list), 10 in South Africa (currently 13), 21 in Botswana (+ 5), 13 in Namibia (+3) and two in Canada (+1).

The long selection process reveals that market consolidation is continuing. "The bigger companies are becoming stronger," shine said, adding that the level of CPQs (Contract Proposal Questionnaires) was very high.

The selection process is the last major event in an incredible year for the diamond giant. "[2011] was an amazing year for De Beers and the DTC. It started with our negotiations with Botswana, receiving a 10-year supply contract and the decision to move DTC to Botswana by 2013. This is a big project and about 30 people [working at DTC in London] have already decided to make the move."

Philippe Mellier was appointed CEO of the De Beers Group and the Oppenheimers decided to sell their 40 percent shareholding in De Beers to Anglo American, which will increase their stake to 85 percent.

As for the market, "The first seven months of the year were driven by the surprising results of the 2010 holiday season, and the restocking that followed, the ripple effect. Great demand by China and India, retailers opening new stores, has further driven demand."

Matters changed from September onwards. "The issues in the Eurozone, liquidity concerns in the diamond market and the devaluation of the rupee," about 13 percent since August, were among the negatives that dominated the market. "People are nervous when sitting on large stocks, hurting confidence," Shine observed.

How does the future look? "2012 will not be crazy as 2011," she concludes.