Anglo American’s 85%-owned De Beers is mulling an overhaul in the way in which it sells rough diamonds to its sightholders.
“We have to re-think and re-imagine it, but we also need to do it with the midstream, not to the mid-stream,” Anglo chief executive Mark Cutifani was quoted as saying by Miningmx at the ongoing Mining Indaba in Cape Town.
Image credit: De Beers Group
“I don’t know where it will land but everyone who is a partner will have to look at a different world.”
De Beers spokesperson David Johnson recently told Rough & Polished that they will be communicating directly with customers in the coming months about the new sightholder contract period, which will focus on maximising the considerable opportunities ahead in the diamond sector.
Bloomberg News reported last month that De Beers is planning to reduce the number of sightholders at the end of the current term.
The six-year sightholder contract, which governs the rules of the sights will come to an end this year.
Poor sales in the final two weeks leading up to Christmas in 2018 (due largely to US stock market volatility and US-China trade tensions), resulted in lower appetite from retailers to restock at the start of 2019.
This led to the midstream being oversupplied with inventory and rough diamond demand subsequently reduced significantly.
These challenges were worsened by liquidity tightness in the midstream, as well as downstream impacts including the evolution to a greater share of online sales.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished from Cape Town, South Africa
