De Beers is to cut the amount of rough diamonds it will offer for sale to sightholders in the coming year as a result of a commitment to support the Namibian diamond industry.
The De Beers-Namibia diamond mining agreement signed in 2016 provided for 15 percent of Namibia's output to go to state-owned company Namdia which will conduct independent sales on behalf of the government, Rapaport reported.
Namdia was established as part of the country’s beneficiation efforts to diversify its diamond industry and is similar to the deal that De Beers signed with Botswana in 2010. De Beers also agreed to raise the supply of rough to it provides its Namibia-based sightholders.
De Beers has about 80 core clients at its international sights, which are held 10 times a year in Botswana. It also supplies rough in separate sights to 11 local sightholders in Namibia, 20 in Botswana and seven in South Africa.
"With the new ITO [where sightholders indicate how much rough they will require for the coming year period starting this month], sightholders are bracing for lower supply given De Beers’ new commitments to Namibia and a similar arrangement already in place in Botswana, where the government takes 15 percent of local production to sell via Okavango Diamond Company. De Beers allocates an additional 10 percent of its production to its auction business before distributing the remainder through the sight system."
Consequently, De Beers is predicting a lower available supply for sightholders in the upcoming ITO period, compared to what it forecast for the 2016-2017 ITO year, De Beers spokesperson David Johnson told Rapaport.
“The impact has been biggest in the international ITOs, as our producer country beneficiation commitments have seen a greater share of our availability being allocated through these channels,” he explained.
Sightholders have estimated that allocations will be up to 20 percent lower under the new ITO arrangement – which begins at the next sight in April – than they were in the previous one.
De Beers declined to comment on the extent of the reduction.
