Opinion: Taking A Realistic Approach To SupplyDecember 12, 07
On December 17th, the DTC will be contacting all applicants for the next contract period to let them know whether we will be able to offer them a supply contract. This will be a day of mixed emotions for the DTC as some companies will secure supply and other businesses, possibly even longstanding clients, will be disappointed.
"The DTC has a finite supply, which is
significantly outstripped by the volume
of rough diamonds being requested by
applicants" - DTC MD Varda Shine
The equation is a simple one. The DTC has a finite supply, which is significantly outstripped by the volume of rough diamonds being requested by applicants. Therefore, unless all applicants were to receive very small levels of supply – which would be in nobody’s interest – it is inevitable that many companies will not have their requests met. Indeed, due to the large imbalance between supply and demand, it is likely that there will be a number of excellent diamond businesses that we will be unable to supply.
The reasons for the mismatch between supply and demand are well known but are worth repeating.
From 2008, the DTC will no longer be able to receive supply from Russian supplier, Alrosa, as a result of a European Commission ruling.
2007 has also seen the birth of two new diamond sales and marketing companies in Namibia and Botswana. These 50/50 partnerships between national governments and the De Beers Group have seen the awarding of contracts to Sightholders for direct supply in both countries to the value of hundreds of millions of dollars. While these companies – DTC Botswana and Namibia Diamond Trading Company (NDTC) – have used similar criteria as that applied in London and Johannesburg, they have added some local criteria reflecting national priorities, and are independent businesses. Their Boards and executives are tasked with promoting the interests of their nationally-based operations.
The objectives of beneficiation – the building of sustainable downstream diamond industries in producing countries – are universally supported by all parts of the De Beers Group, including the DTC. This is not a short term policy but one to which we are committed commercially and ethically for the long term.
The DTC remains the world’s largest and best distributor of rough diamonds and De Beers is constantly investing in finding new diamond deposits. It is our strategy to maintain and enhance this market leading position, in partnership with our Sightholders and producer partners. We want to build an even more successful business and to support our Sightholders for the 2008-2011 supply period in meeting the objectives set out in their contract applications.
Change is often a painful process – commercially and personally – but, ultimately, it will play an important role in the long term success of our industry.