DTC completes transformation of rough distribution

The Diamond Trading Company (DTC), the distribution arm of the De Beers family of companies, today unveiled the final element in its new global rough diamond distribution plans. The company announced that 751 clients of the 79 newly appointed Sightholders will be offered supply through DTC London and DTC South Africa. The global network of 79 Sightholders will be receiving Sights through wholly-owned and joint-venture DTC operations around the world. This marks a transformation in the way the DTC’s rough diamonds are sold to clients globally, with new, independent joint-venture operations – DTC Botswana and Namibia Diamond Trading Company – selling rough diamonds to clients in Botswana and Namibia for the first time. During the previous contract period (2005-07), the DTC sold all of its rough diamonds to clients entirely through DTC London which offered Sights in London and Johannesburg.

Varda Shine, Managing Director of the DTC said, “Throughout this process, we have been impressed by the expertise and high standards of applicant businesses, and we would like to thank all of them for their hard work and commitment. Competition for rough diamonds is now fiercer than ever, and we are confident that the diverse range of companies to which the DTC is able to offer supply are those best placed to add real value to the rough diamonds we sell”. She said “2007 has been a very exciting time for the DTC. We are successfully implementing a new commercial strategy. This involves restructuring our operations to help meet the wider economic goals of producer governments as well as providing our clients with the world’s best source of supply, supported by industry-leading intellectual property.”

All applicants for the new Sightholder contract have been through a fair and robust process2 that assessed applicants’ relative performance against clear and objective criteria, taking into consideration the availability of rough diamonds within the particular categories3 applicants requested. The criteria would identify those applicants who demonstrated excellence in their technical, distribution and marketing ability, and the core strengths of their diamond business. Financial transparency and ethical accountability were mandatory requirements. The DTC is currently investigating ways in which it can retain its valued relationships with current Sightholders that have not secured supply for the 2008-2011 contract period. The company will provide further information on these initiatives before 31 March 2008

Commenting on the announcement, Gareth Penny, Managing Director of the De Beers Group said, “I would like to congratulate the new Sightholders. They represent a world-class list of diamond companies, comprising all areas of expertise and business models: large and small, across all of the world’s trading centres, from dealers to jewellery manufacturers and retailers. Each company will play an important role in meeting the changing needs of an evolving diamond market. Building upon the significant achievements since 2000, the DTC and its Sightholders will work in even closer partnership to help secure the long-term competitive advantage of diamonds over other luxury goods categories.”

Summary of Sightholder selection process

STAGE 1
-Applicants, including existing Sightholders, completed a Contract Proposal (or business plan) outlining their current capabilities and future plans.
- Applicants submitted a separate Contract Proposal for each category of rough diamond in which they required supply (there are 16 categories in total).

STAGE 2
-The Contract Proposals were submitted by applicants to the Ombudsman’s office on 18 July 2007 using an on-line system.
-The Ombudsman’s office screened all the Contract Proposals to remove any confidential information that exceeded the strictly necessary information requested in the Contract Proposal Questionnaire.
-Contract Proposals were passed to the DTC by the Ombudsman’s office during August and September 2007.

STAGE 3
-The DTC Commercial Team cross-checked the information in the Contract Proposals for internal consistency and completeness.

STAGE 4
-The Key Account Manager (KAM) team assessed the Contract Proposals’ satisfaction of the Sightholder Criteria by means of an objective and standardised benchmarked assessment.

STAGE 5
-Once completed, the KAMs’ assessment scores were reviewed and moderated by the KAM Managers to ensure consistency, before presentation to a Commercial Panel of senior DTC executives who in turn reviewed the scoring outcome per category.

STAGE 6
-A commercial competitiveness “score” was then attributed to each Contract Proposal which indicated the maximum US$ amount the DTC would be able to offer that applicant (assuming infinite availability).
-The DTC then commenced the process of matching its availability to applicants’ supply requirements.

STAGE 7
-Applicants qualifying for supply in this process are selected as Sightholders and will be offered supply in the new Contract period.