The Diamond Trading Company calls its sightholder selection process “open and transparent,” and, in many ways, it’s an improvement over the totally non-transparent old days. (As one person put it, any process has to better than “I knew Monty’s father.”) But in the end, and with all due respect to my friends at the DTC, the process still remains, after four go-rounds, a little hard to figure.
Clearly, compiling the list isn’t easy. De Beers has a dwindling amount of rough, and a lot of companies that want to “join the club.” But, as far as I know, this kind of public selection has no counterpart in any other industry. In fact, it has no counterpart in this industry. Other miners have customers come and go, without it being a big deal, never mind widely known.
The very public nature of the DTC selection process seems bound to humiliate the companies that lose their allocation, whether or not that was the DTC’s intention. It can also have a serious impact on a company’s reputation. As Edahn Golan writes today:
We all want to know who was banished from the club … There are, of course, some serious business reasons for the need to know. Who, after a rigorous examination, did not make the cut, it is as if it says, “They are just not good enough and maybe we should be suspicious of their financial abilities now?”
I also have to ask:
– Why does De Beers announce its “provisional list” during the Christmas season, the busiest (and most important) time of the year for most companies? Why can’t they wait three weeks or so? At least it’s better than doing it during Vegas, when the first “Supplier of Choice” announcement occurred.
– Why does De Beers bother to announce the provisional list at all? If it’s so uncertain, don’t announce it. It should be clear by now that saying you have a provisional list just leads to make-shift rosters like this one. Can’t the required audits be done before any list is released?
And, then, of course, there are the outcomes. As De Beers broker Mark Boston wrote:
[e]very process seems to have had some outcomes which one really struggles to comprehend, let alone accept.
And we have that again this year, even though this was a far less dramatic selection than years past, with very few big surprises. Still, there were some, and this article from India’s Economic Times details a few.
Yet, really, the most important question now is: Will this selection process happen again?
Over the next year, De Beers will get a new chairman, and Anglo American will be more firmly in control of the company. It already has a new CEO. There may also be new personnel at the Diamond Trading Company, following its move to Botswana.
And they all might ask themselves: Is this the best way to do this?