De Beers’ Newfound Transparency: Diamond Analysts Weigh In

Rough Market
24/01/2016 15:52

At Anglo American's December 8 Investor Day Presentation, De Beers CEO Philippe Mellier stated that, "I am very pleased to announce that we would like to increase the transparency of De Beers, and starting with the first sight in 2016 we will communicate after each sight the sales of each sight, so that you don’t rely on rumours and you will understand exactly where we are." The Financial Times sought feedback from industry insiders on De Beers' decision to break with decades of secrecy in the hope of spurring a recovery in the diamond market, which has suffered from slowing demand, among other issues. FT writes that, "The change in policy by De Beers ... is being welcomed by customers and company analysts as a move that will bolster confidence in the industry and improve transparency." Jackie Morsel, vice-president at Dali Diamond, a De Beers’ sightholder, said: “Since it will increase transparency, it is indeed a positive change.”

Des Kilalea, analyst at RBC Capital Markets, said: “Publishing the dollar sales figure from the sights will help dispel some of the conflicting numbers which tend to come out and help understanding of De Beers and Anglo.” Some commentary on price trends “would be a welcome addition”, he added. Others, however are less sanguine about De Beers' new strategy, seeing it as just that. Ed Sterck, an analyst with BMO Capital Markets in London, said: “De Beers probably wants to show its buyers that things are not easy for them either, and that they do not have scope to drop prices as some in the trade have called for. At the moment, all we get is the rumour mill about how sights have gone. It seems De Beers wants to reduce the amount of speculation and foster more trust with sightholders in what appears from the outside to be a relatively opaque system.”