Anglo’s Cutifani promises changes in diamond sights as De Beers embarks on “re-think”

Mark Cutifani

ANGLO American CEO, Mark Cutifani, confirmed the group’s 85%-owned De Beers was considering an overhaul in the way in which it sold rough diamonds to cutters and polishers – known as the mid-stream – , adding that no buyer “will be unaffected”.

“We have to re-think and re-imagine it, but we also need to do it with the midstream, not to the mid-stream,” he said of about 85 companies invited at regular times throughout the calendar year to buy rough diamonds from De Beers.

“I don’t know where it will land but everyone who is a partner will have to look at a different world,” he said. Cutifani was commenting in an interview with Miningmx at the Mining Indaba conference in Cape Town.

Bloomberg News reported in January that De Beers was considering change to its ‘sights’, events held in Botswana about 10 times a year. A six-year contract governing the rules of the sights comes to an end this year.

The mid-stream has until recently shown less appetite for diamonds as reflected in the 26% year-on-year decline in De Beers’ total sales to $4bn for 2019.

According to Bloomberg News, the way De Beers currently sells diamonds is to reward buyers based on volume. Cutifani said it was necessary to become “smarter” about its diamond sales whilst acknowledging De Beers CEO Bruce Cleaver’s innovations.

Last year, De Beers allowed buyers of rough diamonds to defer sales in order to ease cashflow pressure and to enable the diamond market to recover. The mid-stream has also struggled to attract decent credit terms.

Beers’ diamond sales for the first sight or sales cycle of 2020 indicated the market may have stabilised, and could even be improving.

Sales totalled $545m which compares to $426m in the previous sales cycle – the last of 2019 – and the $500m achieved in the first cycle of 2019.

“Demand for rough diamonds increased during the first sight of 2020 following the end of year selling season and subsequent inventory restocking,” said Cleaver on January 29.