Saturday, May 15, 2021

Sight holders play catch-up as De Beers modernizes trading

De Beers Group of Companies is reportedly in the process of promulgating stringent terms and conditions for companies who have intentions to join its elite group of sight holders. Those close to the latest developments have revealed that the move is in simple terms aimed at separating the men from the boys and closing out dealers who are not willing to comply with the new regulations.

With the introduction of online trading, whereby dealers can buy and sell parcels of gems worth millions online, pricing data will be provided real time. This will present a challenge to the old fashioned style of trading, through which sight holders were very secretive on their ways of doing. Meanwhile, banks that lend to the industry have heightened demands for a more corporate approach from diamond traders, manufacturers and eventual contenders or buyers.

De Beers last revised its sight holder contracts in 2011. The new details will give companies time to make changes to their accounting practices. But sight holders unwilling or unable to do so will lose their status because of the increased transparency implications that come with the new soon to be implemented regulations.

According to local, regional and international mining commentators, sight holders, experts and analysts, De Beers wants to use the new regulations to force traders to hold a specified proportion of equity in their businesses so they are less reliant on loan facilities, overdrafts and purchase order financing services from banks. They believe the diamond giant has the muscle to strong arm diamond dealers, as it sells an average worth of $6┬ábillion in unpolished gems a year, which makes it the world’s largest diamond supplier by value.

“The move seeks to direct gems to the most financially sound purchasers and make the business more transparent, echoing┬áother signs that the diamond industry is starting to modernize,” reads a press statement from the diamond mining giant.

Anglo American bought Oppenheimer family’s 40 percent ownership in De Beers for $5.1 billion (approximately P50 Billion) in 2012, increasing its stake to approximately 85 percent of the total shares and ending the dynasty’s 80-year ownership. Botswana controls the rest of the business, which was originally founded by the British imperialist Cecil Rhodes.

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