De Beers commits to local diamond manufacturing
De Beers has reduced the supply of rough diamonds it will be offering sightholders in the coming year and will be committed to supporting local diamond manufacturing, according to Rapaport Information Services online portal, Diamonds.net.
According to Diamonds.net. the company signed an agreement with government last year, committing to allocate 15% of its local production to state-owned company Namdia, which will conduct independent sales on behalf of government.
De Beers, in talks with sightholders has estimated that allocations will be up to 20% lower under the new ITO (Intention to Offer) arrangement. With the new ITO period starting in April, sightholders are bracing for lower supply given De Beers’ new commitments to Namibia and a similar arrangement already in place in Botswana, where the government takes 15% of local production to sell via Okavango Diamond Company.
De Beers allocates an additional 10% of its production to its auction business before distributing the remainder through the sight system. The move is part of beneficiation efforts to diversify the diamond industry. De Beers has also agreed to increase the amount of goods it provides to Namibia-based sightholders.
Diamonds.net said as part of its beneficiation programme, De Beer salso supplies rough diamonds in separate sights to 11 local sightholders in Namibia, 20 in Botswana and 7 in South Africa.
Diamonds.net reported that De Beers declined to comment on the extent of the reduction, however De Beers spokesperson David Johnson said it varies for each sightholder, depending on the client’s location and whether it was a participant in the programmes aimed at keeping manufacturing within Botswana, South Africa or Namibia.
“De Beers supplies rough diamonds on a contract basis. Sightholders make an indication of how much rough stones they will require for the coming year to the company which has about 80 core clients at its international sights, which take place 10 times a year in Botswana,” he said.
Johnson said the company is predicting a lower available supply for sightholders in the upcoming ITO period, compared to what it forecast for the 2016-2017 ITO year.
“The impact has been biggest in the international ITOs, as our producer country beneficiation commitments have seen a greater share of our availability being allocated through these channels,” he explained.
De Beers this week held its third sight of the year, the last one in the current ITO period and is expected to announce the sales result early next week. Sales are expected to be lower than those of the first two sights, which yielded US$720 million in January and $545 million in February.