De Beers’ hold on the diamond market has shrunk again.
Ekati, Canada’s first mine, will not renew its agreement to sell 35% of its production to De Beers’ Diamond Trading Company. The deal began shortly after the mine opened in 1998 and was due to expire this year.
“The deal did what it was intended to do,” says Graham Nicholls, a spokesman for BHP, the mine’s owner. “Three years ago we didn’t have the experience we have now and it was to our advantage to lock in that 35%. Today we see ways we can add value to that 35% by marketing and moving further downstream. We want to work with manufacturers and potentially with retailers to find new ways to make the chain more efficient.”
The deal was an unusual one from the start. Because of anti-trust considerations, Ekati could only sell 35% of its production to De Beers. A De Beers statement said the company “does not expect the non-renewal of the contract to have a material effect on its business.” Spokeswoman Lynette Hori noted that the mine only represented three percent by value of the company’s turnover. “It should not have any effect on the goods we offer to clients,” she says.
While past defections from De Beers have sometimes been bitter, both sides stressed that this one was ending on good terms.
The De Beers statement noted the company “draws satisfaction from the professional working relationship with BHP Billiton that has marked the operation of the agreement.” Agreed Nicholls: “Our relationship has been and continues to be very good with De Beers.”