A fresh “feud” between De Beers and Zimbabwe erupted recently when the group’s high-quality diamond retail arm Forevermark said that it will not sell diamonds from Marange fields as there were generally too small and low in quality for the brand to sell.
Zimbabwe’s deputy Mines and Mining Development Minister Gift Chimanikire countered saying that the southern African nation had no plans to sell its diamonds to the “lowly ranked” De Beers.
He said De Beers was “just but a small player in the industry”.
Zimbabwe had previously accused De Beers of “looting” diamonds during a 10-year period it prospected for gems in Marange.
De Beers denied this accusation.
Rough & Polished got in touch with De Beers Group Head of Media Relations, Lynette Gould to get an insight on this latest development.
She also commented on the Oppenheimer family’s plans to sell their 40 percent stake in the group to Anglo-American.
The Kimberley Process recently gave Zimbabwe the green light to resume diamond exports from Marange after a two-year trade embargo. What is De Beers' comment on this move?
De Beers supports the efforts of the 74 members of the KPCS to address the Zimbabwe issue. This has been a challenge that has distracted the KP for far too long. We have commended the participants on finding a way forward and we support the outcome of their work.
Do you see the flooding of Marange gems, especially in India, affecting the diamond market?
While we don't have exact estimates of the resource, as long as Zimbabwe's diamonds come to the market through legitimate channels, we are not concerned about a material impact on the market.
De Beers' quality diamond retail arm Forevermark said recently that it would not sell diamonds from Marange fields as they were generally too small and low in quality for the brand to sell. Could this be an issue of bad blood between your company and Harare?
Just to clarify something. Forevermark is a diamond brand from the De Beers group of companies. Forevermark diamonds are available through specially selected diamond jewelers around the world.
As with any brand that seeks to find its consumer proposition in a competitive market, the positioning of Forevermark is based on consumer research and insight. An analysis of that research clearly shows that a significant number of consumers want further assurances around the quality and sourcing of their diamonds, including both social and environmental practices - and that they expect both to meet higher standards than for "unbranded diamonds." Not all mines live up to the standards of Forevermark, just as not all cuts or colours meet Forevermark's criteria - but that doesn't mean that as a company De Beers is opposed to particular cuts or colours as a matter of policy. The same holds true for sourcing.
Zimbabwe said it has no plans to sell its diamonds to the "lowly" ranked De Beers in response to comments made by Forevermark chief executive. What is your view of that?
At De Beers Group we only sell production from our own mines in South Africa, Botswana, Canada and Namibia.
Zimbabwe indicated that it was preparing a lawsuit against De Beers over its "looting" of Marange diamonds during the period it prospected in the area, but reports say this was now uncertain as “key documents” that detail the group’s exploration have disappeared. What is your comment on this development?
As we have said repeatedly before, these allegations of 'looting' by De Beers are totally untrue. As part of the prospecting work programme to search for the possible kimberlite sources for the diamonds emanating from the Marange area, as well as understand the geological nature of the Marange diamond deposit itself, De Beers routinely collected soil and rock samples across the Marange region, which were submitted to the De Beers laboratories in South Africa for analysis.
Such samples were exported through and with the authorization of the Geological Survey of Zimbabwe in accordance with all the necessary export procedures and suitably signed off.
The prospecting reports detailing the results and analyses were submitted to the Minister of Mines, in accordance with the Zimbabwe legislation and their management of the EPOs.
Whilst we have read media reports about an alleged ‘panel of experts’ being convened, De Beers has not been approached to comment. We are confident that, should such a panel be convened, that they would find absolutely no wrongdoing on the part of De Beers.
What is the difference between Forevermark and the sightholder system?
Forevermark is a diamond brand from the De Beers group of companies. Forevermark diamonds are the world's most carefully selected diamonds and come from sources committed to the highest business, social and environmental standards. Less than 1 percent of the world's diamonds are eligible to become a Forevermark diamond. Forevermark diamonds are beautifully crafted using skill and artistry passed down through generations by a select group of master craftsmen and are exclusively available from select Authorised Forevermark Jewellers. Each Forevermark diamond is inscribed with a promise; a promise that it is beautiful, rare and that it has been responsibly sourced.
The Sightholder system is an integral part of the way the Diamond Trading Company (the rough diamond distribution arm of De Beers) sells its rough diamonds to the world's leading diamantaires at Sights in London and southern Africa ten times a year.
Will De Beers ever consider changing its sightholder system as some people view it as a take-it-or-leave-it system under which buyers are obliged to purchase predetermined lots of rough diamonds at fixed prices?
The Sightholder system, and in particular the Intention to Offer, is an integral part of De Beers' business model. We believe it is by far the best model for selling scale quantities of rough diamonds on a consistent basis at sustainable prices.
Anglo American recently agreed to acquire the Oppenheimer family's 40 percent stake in De Beers. Will this bring change to the way in which the company is run?
Anglo American will bring a new dimension to our business, but our day jobs will not change. It is business as usual as we continue to focus on maximising the value and life of diamonds.
Anglo American and De Beers share common roots. Indeed, Anglo American is the natural home for De Beers as they have been major shareholders since 1926. As such, they have good knowledge of the diamond business and a deep appreciation for the unique nature of diamonds. The benefits brought by Anglo American's scale, technical expertise and financial resources will enable De Beers to enhance its position across the diamond pipeline in a rapidly evolving diamond market.
Some analysts have suggested that the future of the diamond industry was bleak, and the decision by the Oppenheimer's family to dispose of their stake in De Beers was a confirmation of that fear. What is your reaction to that assertion?
Naturally, we would disagree with that view. Throughout this year we've seen strong demand growth led by emerging economies, with Greater China now being the world's second largest consumer market for diamonds, and India close behind. Furthermore, demand is expected to significantly outperform mine supply, leading to a substantial structural supply/demand gap which is expected to continue driving rough diamond prices. I think it would be difficult to argue that the future of the industry looks 'bleak'.
Cynthia Carroll, CEO of Anglo American, said [the] ‘announcement [of Anglo American and the Oppenheimer family deal] marks our commitment to an industry with highly attractive long term supply and demand fundamentals. Underpinned by the security of supply offered by a new 10-year sales agreement with Botswana, this forms a compelling proposition. .... I believe that the benefits brought by Anglo American's scale, technical, operational and exploration expertise and financial resources, combined with the unquestionable leadership of De Beers' business and iconic brand, will enable De Beers to enhance its position across the diamond pipeline and capture the potential presented by a rapidly evolving diamond market.’
What is De Beers' business outlook for the festive season?
Despite the current economic uncertainty we are confident that consumers still love diamonds - we've seen good growth in all the major diamond markets this year. As we move into the all-important Christmas buying period (between Thanksgiving and Christmas) in the US we're cautiously optimistic in our outlook.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
