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RAPAPORT... De Beers reiterated its commitment to continue selling rough diamonds to the secondary market in Israel, dispelling rumors that it intends to close its Diamdel office in the country.
"The Diamdel Israel office will be scaled back, as appropriate, along with a number of other offices," De Beers spokesperson Lynette Gould told Rapaport News. "It is important to stress that Diamdel Israel will continue to sell to non-sightholders in Israel."
De Beers announced on June 11, 2007 that Diamdel, which sells rough diamonds to the secondary (or non-sightholder) market, would scale down operations as it was not fitting the company's long term growth strategy. Under the restructure, Diamdel will close its offices in South Africa, Namibia, and Shanghai, while its offices in Israel and Antwerp will be scaled down, with the Ramat Gan Central Processing Operation (CPO) also closing. The majority of De Beers' goods will be sold to the secondary market through its India branch and in Antwerp, the company stated.
The announcement was a particular blow for Israel, which a year earlier opened the CPO as Diamdel's main sorting facility. While it is still unclear to what extent the office will be trimmed, concern for the local secondary market was evident at the Israel Diamond Exchange (IDE) annual meeting June 19.
"The Israeli market is worried and we don’t know to what extent [the restructure] will affect us," said one industry professional. "While some have a stable supply of rough, Diamdel was critical to others."
Reports out of a meeting with DTC management and Israeli market leaders last week, said that a final decision on the extent to which the restructure will affect Israel would be made in the coming weeks, likely by the end of June.
Avi Paz, who was elected to a second term as IDE's president at the June 19 annual meeting, told Rapaport News however, that the Diamdel downsize had more of a psychological effect than a real impact on the Israeli industry.
"We must remember Diamdel sales were a very small portion of Israel's diamond trade, selling around $150 to $200 million worth of rough in a $3.5 billion market," he said. "More important to us is that Diamdel was a major supply source to the younger generation of diamantaires in Israel."
Meanwhile, the Diamdel discussion came as DTC managing director Varda Shine told Israeli sightholders June 20 that the number of sightholders will be reduced in 2008, and that fewer goods will be available for sale to the traditional cutting centers, including Israel.
In response, Paz said he was not concerned that there would be a supply shortage in the coming year.
"DTC will still sell a lot of rough to Israel," he said. "I believe that the role of Israel is much higher than the statistics show, and that will continue."
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