Post Reporter
De Beers, the renowned diamond mining company, has been quietly selling rough diamonds to a select group of customers at significantly discounted prices, sparking tensions within the industry. This unusual move is aimed at reducing De Beers’s substantial inventories without openly cutting prices, a strategy the company typically avoids. However, this has led to a notable disparity between De Beers’s official pricing and the valuations in the broader diamond market.
Normally, De Beers holds ten sales in Botswana each year for its approximately 70 registered buyers, with non-negotiable prices. In contrast, recent side deals have seen the company selling hundreds of millions of dollars worth of rough diamonds at a 10% to 20% discount to its set prices. This preferential treatment has fueled resentment among buyers not selected for these special deals, who are still expected to pay the company’s official rates at its scheduled sales.
The situation highlights the dilemma De Beers faces as it navigates pressure from its owner, Anglo American Plc, to boost sales while also seeking to support the global market by avoiding across-the-board price cuts. This predicament is particularly pressing as the diamond market shows signs of stabilizing after a prolonged demand crisis, compounded by the uncertainty of President Donald Trump’s trade war and proposed levies.
De Beers’s management is under strict instructions to reduce costs and stem losses, with Anglo American seeking to sell the diamond business as part of its turnaround strategy. In response, De Beers has been drastically cutting costs, including shuttering its lab-grown diamond unit, Lightbox. Despite these efforts, the company’s significant influence in the rough-diamond market means that any price cuts could have a devastating impact on market sentiment, particularly given the recent signs of market recovery.
The lack of transparency surrounding the special deals has further exacerbated tensions, with buyers complaining about the selection process and the potential for being undercut by rivals in the polished stone market. The diamond industry is also grappling with the implications of Trump’s import tariffs, which have led to a slowdown in purchases and fears of a demand slump if US consumers are forced to pay more due to the levies. As a result, the industry is lobbying for an exemption from these tariffs, seeking to mitigate the adverse effects on the market.
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