Indian Diamantaires Form Rough Diamond Purchasing Company

Sixty-one diamond companies, including 16 DTC Sightholders, five Rio Tinto, and two BHP clients, have formed Diamond India, a mammoth rough diamond sourcing company. With an initial investment of Rs. 2.25 billion ($49.2 million), the company plans to become a key player in rough diamond purchasing and is currently negotiating with a consortium of three banks for credit facilities to add to existing funds.

“A number of other companies are also expressing interest in joining up,” says Praveen Shankar Pandya, chairman and managing director of the newly formed purchasing firm.

The company, constituted under the Indian Companies Act as a public limited company, plans to go public in a couple of years. “Once we have shown some results,” says Pandya.

Presently there are 10 directors of which four are permanent directors with a tenure of four years. These are Praveen Shankar Pandya, Dilip Lakhi, Tanvir Choksi, and Nilesh Shah. The remaining six directors will rotate on a periodic basis. The company, which has set up offices in Modi Chambers in the Opera House diamond hub, also plans to enlist two senior professionals to look after day-to-day operations.

“The aim of setting up the company is to source rough directly from original miners,” Pandya said in an interview. “Miners need the comfort of being able to forge long term agreements and we are in a position to offer that. However, we are also open to across the table sales if some miner so desires. We would not rule it out. But we are not interested in second sale.”

According to estimates, the DTC supplies around 45 percent of the world’s rough diamonds, 10 percent comes from Rio Tinto, 5 percent from BHP Billiton. “With the major miners accounting for about 60 percent of the rough, there is still another 40 percent available for procurement,” says Pandya. “And we are looking at taking a sizeable share of this.”

Another 20 percent of the global supply comes from Russian diamond miner, Alrosa.

Diamond India will limit itself to procuring rough diamonds for the benefit of its member, and has no plans to enter into manufacturing operations.

Asked if the company had any plans to move towards direct client status with any of the major mining companies, Pandya said that as the company was not a manufacturing company, such a development was unlikely.

The entry of Diamond India in the market promises to impact the way the center purchases rough and boost India's diamond manufacturing capabilities.