Yves Alexis is the Managing Director of SAFDICO Antwerp, which is a part of the worldwide group standing for the South African Diamond Corporation. The company has its manufacturing facilities in South Africa, Botswana, Belgium and New York and is specializing mostly in goods for the high-end jewelry market as well as in fancy yellow diamonds and mainstream goods for the Far East market. In his interview to Rough&Polished, Mr. Alexis touched upon some problems currently facing the rough diamond market.
Could you share you opinion about the sale systems of such rough diamond producers as De Beers, ALROSA, BHP Billiton, Rio Tinto and Harry Winston in the current uneasy environment on the diamond market? Could you give a more or less detailed description of positive and negative aspects of their sale systems and sale strategies?
It is a very broad question. You can speak for days on it, but each producer has its own way of selling. De Beers sells with what they call sights. They have allocated customers to which they sell 10 times a year goods which are suitable for their customers’ operation. Other producers work differently. BHP, for instance, sell their diamonds with an auction based-system which has been developed by mathematicians and which is Internet based and occurs monthly as well. So it is very different way of working. ALROSA is a different story, they work more with contracts.
So these three main suppliers have different ways of selling their diamonds. Each way has its pros and cons, with each producer depending on its manufacturers. I would say that De Beers’ model is quite beneficial in the sense that you are more or less guaranteed to have regular supply of the same kind of goods that you could use for your factories, because if you have a manufacturing facility, the workers within it are trained to work with certain kinds, size, make and so on and each factory has it own specifics.
If you have a regular supply from a large producer like DTC, which can monthly sell you boxes which contain the same kind of goods each month, it is a more or less an easy way of maintaining a polishing facility.
With ALROSA, I’ll tell you honestly I am less familiar, because we are not regular customers for the moment. As for BHP, because of its auction base you are never guaranteed to have your supply.
Would you like ALROSA to sell more diamonds now?
I think today the market is very fragile because of the financial crisis. For many months people were not able to sell polished and much less rough diamonds and today we are slowly starting to emerge and see stabilization of polished prices. So we are now more or less aware upfront of what customers are ready to pay for polished diamonds. Both markets have different dynamics but nonetheless I believe there should be some correlation between the two - polished and rough - in order to have a finished product and if there is a large influx of rough diamonds on the market - because I know that on the Russian side they have accumulated a lot of goods in the last months without selling may be for 8-9 months - it may certainly impact the fragile equilibrium where we are now.
It remains to be seen at which prices they will be sold and how they would like to release their goods. There are a lot of political changes now at ALROSA, and I don’t know what will happen.
Many experts say that Russian diamond fields are yielding diamonds of a very high quality. What is your point of view in this respect?
Russian diamonds have been known to be of a very high quality, very high colors. In the past, Russian-made diamonds were brands. It was 10-15 years ago they used to be brands, the Russian make. Today things have changed, diamonds have not changed of course, but the make is different. I think like always that comes out off the Russian minds that they are of a very high quality. Nevertheless there is also high percentage of what is called fluorescence which is a trade characteristic of a diamond - the more fluorescence you have the less price you can achieve for the diamond, because fluorescence may impact the life and the brilliance of a diamond. So the more fluorescence you have the lower price you can achieve and it is also less desirable on the market. And a lot of Russian diamonds stand to have fluorescence at some degrees.
Would you like to buy Russian diamonds? What do you think about the long-term contacts between ALROSA and some Antwerp diamonds companies?
We are definitely interested in being customers of ALROSA. We are interested in securing a position on the market, and we believe we have already a position on the market and we would like to sustain that. As for long-term contacts, of course, it is quite new, this concept. The pricing is important. It is hard to give an answer for such a long period – a term of 3 to 5 years is a really long time in the diamond world - but nonetheless we would be very interested in being supplied by ALROSA.
Alex Shishlo, Editor of the Rough&Polished European Bureau, from Antwerp
