Louise Prior, DTC spokeswoman, has very nicely taken the time to answer a few questions from us about the latest sightholder selection. I found her remarks intriguing, particularly her strong hints that there might be a change or two to come …
Why haven’t you announced your list publicly, as you did with the sightholders in Namibia and Botswana? Does it make sense to have a situation where people speculate and a leading publication even publishes its own list?
We are not commenting on the list, and there are three reasons. This current contract expires 31st December and the new contract begins the 31st of March. This transition period will give those companies that won’t be getting supply from us time to develop their relationships with other suppliers. We wanted to give them three months of quiet time without having to fight it out in the public domain why they are on or off, since there are exceptional businesses who we would like to supply but we just don’t have enough goods to supply all the applicants at an economically sustainable level.
In addition, in the first three months of next year, we will be undertaking a third party verification of the information supplied by the clients. We will not be confirming a contract to anyone who has contravened materially our best practice requirements. It is very possible the list will go down before March 31st because of the third party verification. It may not, but I will be surprised if we have 79 clients when we start the new contract period at the end of March.
In addition, the contracts won’t be confirmed until we have mutually agreed business plans based on what clients have proposed in their contract proposals.
The Best Practice Principles are talked about a lot. Has any company been taken off the list for violating the BPP?
Can’t comment on that. Let’s just say there are a couple of companies under investigation at the moment.
If the list does go down because of the third party verification, is it possible that any of the sightholders taken off the list will be put back on?
No. We have decided if any of the clients come off the list those goods will be reallocated during the ITO [Intention to Offer] period. We don’t have a reserve list of sightholders.
So far, there have been three “selections.” In two of them, the list was dramatically reduced. Is that going to be standard?
This new contract period is for three years. Look where we were three years ago in this business and look where we are now. At the moment, we think we have the best possible list of clients for the goods we have to sell. I think it’s too early to say what we will do the next time. We’ve seen so many changes in our industry. This year we’ve seen tremendous transformation in the cutting and polishing industries in Botswana and Namibia and these centres will continue to grow over the next few years.
There is a lot of talk that India didn’t do as well, while New York did. Does this make sense given the countries of Southern Africa are using bigger stones?
The reason is pretty simple. We don’t allocate to centers. We allocate to those businesses regardless of where they are in the world that will add value to the goods we are selling. It’s probably worth bearing in mind of course that we have fewer goods to sell this time round because of the reduction from Alrosa and because of our commitment to the beneficiation goals of the Governments of Botswana and Namibia.
Are any of the sightholders using the services for ex-sightholders you are providing from Price Waterhouse?
I can’t comment on that at the moment. We are looking at an extension to that program which we will announce in February. We will be losing some fabulous businesses, simply because we can not offer them supply, so what we are looking at is some kind of program for former sightholders where we will publicly endorse those companies as a DTC-endorsed business saying they have passed the BPP hurdle and have also submitted consolidated financial accounts. We are looking at how we can roll that program out to clients coming off the list so we can retain relationships with them. The final details won’t be available till February.
Is there anything you think was improved in this selection process?
Last time we took on a lot of feedback from the sightholders and the brokers about what we could do better this time. One of the criticisms we got from sightholders is that we were not concentrating on what people do with their goods but rather their holistic business. So this time, we really concentrated on how sightholders add value to the goods rather than comparing the businesses holistically against each other.
What is going to happen with the Forevermark?
I can’t comment on that because that is now in the hands of De Beers Group marketing and they will be making their own announcements on the Forevermark. What they have said is it will be open to qualifying non-sightholders and will be open to non-DTC goods.
Thank you Louise.
UPDATE: I should say two leading publications. Here is Idex’s list.