The Diamond Trading Company (DTC), the De Beers rough distribution unit, has chosen 72 sightholders for its next supplier of choice contract. The company raised the number of sights for Botswana but said it will reduce its rough supply out of London.
”The DTC is committed to beneficiation and, as part of the new contract period, more De Beers diamonds than ever before will be made available to a larger pool of sightholders in Botswana and Namibia,” DTC explained.
The company announced Monday that its provisional list of sightholders for the three-year contract that is set to begin on March 31, 2012, and includes 66 applicants who will receive supply in London, slightly below the 68 that currently have sights there. The number of Botswana sightholders has been increased to 21, from 16 currently, while 13 companies will receive sights in Namibia, compared with the previous list of 10. DTC’s South African client base was reduced to 10 from 13, while the company maintained its two sightholders in Canada. Many of the London sightholders have duplicate sights in southern Africa.
Varda Shine (pictured), DTC’s chief executive, told Rapaport News that the company will reduce its volume of supply to London sightholders in a meaningful way due to the supply agreements De Beers has signed with its partner countries. ”There will definitely be less supply available for our London sightholders,” she said.
De Beers recently agreed to allocate 10 percent of Debswana goods, an estimated 2.2 million carats per year, to the Botswana government to sell in Gaborone independent of the DTC sight system, with the amount set to increase to 15 percent within five years. The company has similar agreements governing its South Africa and Canada production. In addition, approximately 10 percent of De Beers output is allocated to distribute through its Diamdel auctions. De Beers production is expected to remain stable at around 33 million to 34 million carats in 2011.
Shine added that the Botswana supply agreement signed in September included an element requiring De Beers to raise its supply to DTC Botswana. Also as part of the deal, De Beers is planning to move its London sights and sales operations to Gaborone by the end of 2013.
DTC explained that its level of supply to each sightholder is determined by the sightholder’s relative score on its contract proposal questionnaire, combined with DTC’s forecast availability in each category of rough diamonds.
Shine noted that the most significant element of the new supply of choice contract will be that DTC has adopted a dynamic distribution policy whereby companies buying goods from Diamdel may still be invited to apply for a sightholder supply contract after March. The invitation will be based on their demonstrating strong demand for a particular category of goods and subject to DTC forecasted availability.
Still, she stressed that the company is committed to the supplier of contract system and dismissed concerns that arose since Anglo American agreed to raise its stake in De Beers from 40 percent to 85 percent, that De Beers will reconsider its sales mechanisms beyond the coming three year contract.
”Anglo’s not a new shareholder and when they look at our distribution mix of long term contracts with the auctions, they will see that it works,” Shine said. ”We are extremely committed to the intentions to offer process.”
Rapaport will publish its provisional list of successful sightholder applicants as they are confirmed.