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De Beers to Unveil Sightholder Requirements in July
Focus on Financial Transparency in New Contract Period
Jun 24, 2014 4:31 AM
By Avi Krawitz
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RAPAPORT... De Beers will unveil in July its requirements for sightholder applications for the next three-year contract period, company executives said on Monday in Israel. They stressed that the focus will be on ensuring greater transparency and financial governance among sightholders.
“We felt we need to be more flexible and simplify the process, but not without keeping certain hurdles,” Paul Rowley, De Beers vice president of global sightholder sales (pictured), said at a meeting with the trade press in Tel Aviv. “We’re very keen to see the sightholder brand become more robust. Through our best practice principles and financial governance we’re looking for more transparency and to make sure that sightholders are in a financially strong position to take the industry forward with us.”
The new contract period begins in April 2015 and will run through March 2018. De Beers is currently finalizing its requirements before presenting them to sightholders at the next sight, which is scheduled to take place from July 14 to 18. Rowley said that applications will be opened from around September this year.
In simplifying the process, Nigel Simson, the senior vice president of sightholder services for De Beers global sightholder sales, noted that the company has scrapped the contract proposal questionnaire (CPQ) that was previously required to become a sightholder.
He explained the principles guiding De Beers in the process were a commitment to the intention to offer (ITO) mechanism as the main supply vehicle that provides sightholders with the consistency they need to operate their factories efficiently. He stressed that there will be a greater focus on financial transparency, requiring sightholders to adhere to international financial reporting standards (IFRS).
Simson added that De Beers is also introducing greater flexibility in how it works with sightholders. In doing so, management is spending more time in the market at the trading centers since the company’s move to Botswana last year, he explained.
De Beers currently has 84 sightholders receiving goods primarily through its global sightholder sales unit, but also through the company’s Botswana, Namibia, South Africa and Canada sights. In addition, the company sells 10 percent of its production via its auctions sales.
De Beers Branding
De Beers will also launch its new sightholder signature at the July sight as part of its effort to rebrand all business units under the De Beers name. Previously, sightholders could only use the Diamond Trading Company (DTC) branding in their marketing, while auction sales were done under the Diamdel logo.
“We moved away from the DTC and the reason was to capitalize on the strength of the De Beers name and utilize the brand in the mid-to-downstream market,” Rowley said. “So when we look at our customers, it’s De Beers either through sightholder sales, auction sales, or through Forevermark. It’s about bringing everything under one umbrella and looking at all our business units under one company.”
Solid First Half
De Beers sightholder sales management team met with sightholders in Tel Aviv ahead of the new application process. They’ve held similar consultations with sightholders in the U.S. and India, and are planning trips to Belgium and Hong Kong.
Rowley reported that tight liquidity remains a primary concern for sightholders along with price and supply volatility. He declined to say how much De Beers prices rose during the first half of 2014 ahead of the company’s interim results that are due to be published on July 25.
Rowley noted that prices were solid and sustainable given the steady polished demand experienced during the Christmas and Chinese New Year periods.
“In contrast to 2011 when rough prices rose due to speculation, the increases in 2014 have been more measured and sustainable,” Rowley said. “We’re still cautious about the second half but the first six months were reasonably good for us.”
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Tags:
Avi Krawitz, De Beers, diamonds, Rapaport, Sightholders
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