The diamond value chain
THE NATURE OF MINING means resources are non-renewable and, as a result, De Beers is constantly working to ensure future reserves for mining. In doing so it undertakes its own prospecting and it partners with more than a dozen exploration companies, introducing new technologies and ways to explore and to accurately determine the viability of dozens of deposits it discovers each year.
As history has shown, major diamond mines are rare discoveries and once its reserves have been proved and a bankable feasibility study conducted, the company can move towards production, as has been seen at its Voorspoed Mine. In addition, De Beers has recently invested R1,1bn in its marine mining project using the vessel Peace in Africa off South Africa’s Atlantic coastline – this country’s first deep-water, full-scale sea mining operation.
Once the diamonds have been mined they have to be sorted and distributed. That takes place in DTC SA in Kimberley and at De Beers in London and at the expanding Gaboronebased Diamond Trading Company (DTC). De Beers distributes rough diamonds, selling to 78 leading cutters who will sell the gems to jewellery manufacturers who will be responsible for crafting the end product.
In line with efficiency and Government’s beneficiation objectives, the DTC’s sorting, valuing and sales operations in SA have now been merged into one office in Kimberley to create DTC SA. Government has set up a diamond trading operation for smaller scale cutters, known as the State Diamond Trader. De Beers worked with Government to help establish the venture and now most mining companies producing diamonds in SA offer up to 10% of their production to that body at a market- related price.
Government hopes to boost SA’s cutting and polishing industry by ensuring the availability of quality gems and to date De Beers is the only company to have fully complied, though other suppliers are now coming on stream. Around 40% of De Beers’ production in SA is sold to the local cutting industry: those sales are worth US$650m. Through initiatives such as the Harry Oppenheimer Diamond Training School, De Beers is facilitating cutting and polishing skills required in the industry. The possibility of establishing an international diamond and jewellery academy is also being explored by the DTC with the Northern Cape provincial government.
For more than 10 years the DTC has run the Shining Light Awards competition to encourage and develop SA’s jewellery design talent, as well as create opportunities for skills development and job creation for all South Africans. Since the awards began there have been more than 90 winners.
Marketing is carried out by De Beers Group Marketing (DBGM), a separate business unit within the company with some activity in the SA market. DBGM will continue to focus on three core activities: developing and marketing “big ideas,” such as the Trilogy programme, which has proved so successful at driving demand; further developing the Forevermark programme, a branded diamond concept; and maintaining consumer confidence in diamonds.