Happy New Year everyone! Hope lots of good things happen to you in 2008.
The Indian diamond industry doesn’t think the year has got off to a good start, however. Gem & Jewellery Export Promotion Council (GJEPC) chairman Sanjay Kothari held a press conference yesterday to express the industry’s concern over the new De Beers Diamond Trading Company (DTC) client list for the 2008-2011 contract period.
You can check the details here or pretty much anywhere else on business and industry-related sites. There’s also this brave observation that Diamonds India Ltd., the rough sourcing firm floated by 60 Indian diamantaires, will source goods from ‘elsewhere’.
What strikes me though, is the fact that De Beers, which now only controls between 35% and 40% of the world’s rough diamonds, down from a many-decade-long spell at 85%, can still shake the global industry.
The drop in the share of rough they controlled globally is what prompted them to move from their historic model of controlling supply to controlling distribution – the supplier of choice (SOC) system. And while everyone has written off SOC as a failed system, the new SOC-II, the system’s second edition with the bugs supposedly ironed out, has reminded everyone right off the launch pad that De Beers still packs a hefty punch.
India gets direct rough supplies from Rio Tinto, BHP Billiton and Alrosa (by bidding on their tenders), a great deal from the reselling market in Antwerp and a fair amount from resellers in Israel. Yet because De Beers has shed five clients net in India and three Indian-owned firms in Belgium, the Indian industry is reaching for the life-jackets.
More than ever, these developments reinforce the common wisdom that the money lies in either owning a mine or owning a customer (retail). If you’re anywhere in between in the diamond pipeline, you’re life will be one of unending pain.
