To ensure supply, diamond processors flock to De Beers

Amid expectations of a turnaround in global jewellery purchases and a revival in ornament exports, Indian diamond processors participated aggressively in the De Beers’ sightholders contract registration to ensure supply of rough diamonds till 2018.

A sightholder is a company on the Diamond Trading Company’s list of authorised bulk purchasers of rough diamonds.

DTC is controlled by the Botswana-based De Beers, the world’s largest diamond miner, which accounts for about 40 per cent of global supplies of rough diamonds.

During August 25-29, the company had called for registration from diamond processors for the period between 2015 and 2018.

While De Beers did not specify the number of registered sightholders from India, sources said this year, the number of participants had increased 15-20 per cent compared to the registration three years ago.

India accounted for more than half the 83 sightholders nominated by De Beers for 2012-15.

Of the remaining, the most were Indian diamond processing groups in Antwerp (Belgium), South Africa, China and Hong Kong.

“De Beers received an encouraging response from Indian diamantaires, as it is the world’s largest diamond cutting and polishing centre, processing 11 out of every 13 diamonds mined globally,” said a leading diamond solitaire and jewellery exporter.

Barring July, India’s gems & jewellery exports have reported growth so far this financial year. In July, these exports fell 4.68 per cent to $2,674.27 million (Rs 16,061.76 crore) from $2,805.59 million (Rs 16,771.81 crore) in the corresponding period last year.

It is likely exports in August remained subdued, owing to weakening global retail sales, especially in China.

“De Beers’ sightholding is a long-term bet Indian diamantaires are looking at.

"Also, Indian diamond processors are ensuring rough diamond supply which is mandatory for any business, including diamond-cutting and polishing.

"Therefore, participating in De Beer’s sightholding aggressively makes sense,” said Vipul Shah, chairman,

Gems and Jewellery Export Promotion Council.

Since the global economic meltdown of 2008, India has been betting big on the Chinese market.

The steep fall in retail sales in China through the past few months has hit India’s diamond jewellery exports.

“The basic raw materials remain the same.

"Exports cannot decline beyond a point.

"Therefore, raw material surety is required.

"De Beers processes only 40-42 per cent of the rough diamonds they mine and, hence, Indian processors should take a long-term view,” said Sabyasachi Ray, executive director, GJEPC.

Mehul Choksi, managing director of Gitanjali Gems, a De Beers’ sightholder, said the current fall in exports was a seasonal trend.

“Exports decline in the July-August period. But so far, this year has been good.

"We anticipate the economic recovery in the US will yield positive results on jewellery exports,” he said.

The US accounts for 38 per cent of global jewellery consumption.

Rough diamond purchases through sightholders is the cheapest compared to other means of procurement, including participating in open auctions and direct procurement from miners such as ALROSA of Russia.

The image is used for representational purpose only