Penny & Shine at M2M Conference: Less Rough Supplies

(IDEX Online News) - Departing De Beers CEO Gareth Penny took a broad view of changes in the industry, warning of declining rough diamond supplies, while DTC's CEO Varda Shine announced the arrival of Forevermark in India and suggested that the number Sightholders may decline. Both spoke on Tuesday at the Mines to Market Conference in Mumbai.

In what was likely his last speech to the industry, Penny said small artisanal manufacturing, widely found in India a decade ago, was largely replaced by sophisticated state of the art facilities. In that period, the U.S. share of global retail demand declined from 45 percent to 40, while India more than doubled from 3 percent to 7 and China's demand tripled from 2 to 6 percent.

Stable to declining rough diamond supplies will dominate the future of the industry together with challenges to diamond equity – the reputation of diamonds – and consumer shifts as tastes change, from a product to an experience like vacations, spas or even an iPad.

Penny does not think that in the long run Zimbabwe's diamond production will significantly alter the total level of rough diamond supply to the market, predicting stable supply until 2020 and a decline thereafter for the following 20 years.

Finally, he highlighted four characteristics found in companies that  have existed more than 100 years, as found by research at the Shell oil company: Cohesion and Identity - the ability to build a corporate DNA; Sensitivity to the Environment – the ability to learn and adapt to changing circumstances; Tolerance and its Decentralization – the ability to build constructive relationships in and outside the organization; and Conservative Financing – the ability to finance its own growth and evolution effectively.

While the leadership of De Beers is yet undecided, Penny was welcomed warmly by the Indian industry thanking him for his many years at the company and his support of the Indian diamond industry.

Following Penny, Diamond Trading Company (DTC) CEO Shine discussed the new policies regarding the Diamdel auctions (see more about it here). She reassured the Indian diamond industry that De Beers' distribution approach from March 2012, when the new Sightholder contracts will begin, will be a combination of ITOs by the DTC and auctions by Diamdel, adding that the whole is greater than the sum of parts.

Shine announced the Forevermark program will be lunched in India in December, starting in Bangalore, followed by Mumbai and Delhi. The diamond brand will focus on major growth markets accounting for 85 percent of future growth.

She added that while diamond wedding rings are in growing popularity, 80 percent in China's two largest cities, De Beers would like to develop purchase options for a second diamond, later in life after the wedding.

In a question and answer session, Shine said that due to the decrease in De Beers' production, the number of Sightholders will not increase, insinuating a decrease. De Beers plans to mine about 40 million carats a year starting in 2011.