The lecture by Gareth Penny, Managing Director of De Beers, during the international rough conference currently taking place in Israel, focused on four key questions that the diamond industry is facing: What are the major achievements of the industry in the last 5-10 years? What are the present challenges? What can the industry do? What can De Beers do?
Penny indicated that in the last decade De Beers increased its production by 50%, leading to greater output from 30 million carats in 1999 to 51 million carats this year alone. At the same time, the safety level in the mines has increased tremendously. “In retrospect, I see an improvement in the last decade, which is expressed in technological advancements.”
Penny indicated that in the last decade the retail market has grown substantially mainly due to developing markets, which are not as strong as we desire but are definitely significant, in the center of which are China and India. “We are seeing prosperity in new brands, in addition to growing transparency in the industry," Penny emphasized.
Penny enumerated the challenges facing the industry, in particular the increase in production costs, spikes in oil prices, electricity supply problems in the southern part of Africa, and without a doubt, the demand made by the producing countries to receive added value for the diamonds in their territory.
Penny underlined the retail issue as being the focal point of the industry. “What is imperative is getting to the end user. You can blame the debt on the banks, the mining companies, the manufacturers – but the goal is to get to the end user."
How can retail sales be improved? The industry as a whole must unite and act to promote the sale of diamonds. The liquidity factor in the industry must be improved.
Penny said that it would be worthwhile contemplating whether a new currency other than the US dollar should be used. "We commenced trade with US dollars 40 years ago. Is it time for a change in currency?”
"What are De Beers’ plans? The first thing is to have a vision for the future. We are searching for a driving force to influence growth profit, working to increase demand, as well as improving operational and capital efficiency together with added value,” Penny said. “We are developing new mines and are selling those which do not conform with our strategy. In addition the DTC is changing to meet local marketing channels."
