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De Beers CEO Hints at Sight Changes, Continued Flexibility in 2016
Jan 24, 2016 5:05 AM
By Rapaport News
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RAPAPORT... De Beers will “continue to focus on being flexible” in its
sightholder sales after offering measures including deferrals of goods at
contract sales last year.
The miner let buyers defer allocations
at its November sight to December or bring the following month’s supply
forward, and continued offering this flexibility at the December
sale, instead of holding purchasers to their original applications for
rough – or intentions to offer (ITOs). The measures came amid a slump in rough demand
and smalls sights valuing an estimated $70 million in November and about $180
million in December.
De Beers chief executive officer Philippe Mellier hinted the company would
continue to be flexible in applying its supply rules.
“While
the actions we took last year in response to lower levels of demand mean that
we will have a smaller level of forecast availability for the 2016 to 2017
period, we will continue to focus on being flexible and attempting to meet your
needs if demand conditions change,” Mellier told sightholders at Gaborone in Botswana January 20 at the first sight
of the year.
“Should your requirements for rough
increase as we head into the second half of the year, you will still have the
opportunity to increase your share of our availability through mechanisms such
as ex-plan allocations, additional requests and purchases from our auction-sales
events,” Mellier said.
It is not
yet clear how much flexibility De Beers offered in its January sight. The company
cut prices by as much as 7 percent, Bloomberg reported January 19, citing sources
who asked not to be identified. The rough supplier was planning to offer $450
million of diamonds for sale, the report added, citing one anonymous source.
Mellier said he has seen polished diamond prices start to
stabilise and even increase in certain areas. “We have seen some encouraging –
not magnificent, but definitely encouraging – early indications from holiday
season sales in the US consumer market. And we have seen greater trading activity
than at the end of 2015.”
After such a difficult year, he
pointed out, there are some reasons to be cautiously optimistic as 2016 begins,
and “we may be starting to recover some of the lost momentum,” the CEO said.
De Beers is looking at refining its sightholder-sales
operating model and creating new teams within the organization to improve agility
and responsiveness, he added.
"We will continue on the journey we have started with the current supply contract but, given the
expected volatility of the world in which we will operate, we will restructure global sightholder sales so we can sharpen our focus on customer relationships and on product and service delivery," Mellier said. "This will improve our responsiveness and provide all our businesses with the best insulation
against those challenges that remain outside of our control."
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Tags:
De Beers, Philippe Mellier, Rapaport News, Sights
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