Yesterday De Beers announced five new sightholders. For reasons that have been repeatedly explained to me—but I’m still not sure make sense—it announced it had added companies, but did not reveal their names. However, we have learned those companies are: Diambel Group, StarRays, J.B. and Brothers (aka Yaelstar Group), D. Navin Chandra Gems, and Vallabh Dhanji. All are Indian companies or companies with Indian roots based in Antwerp. 

The fact that De Beers keeps adding new members to its “club” seems to contradict its prior pronouncements. For the last decade, it has repeatedly trimmed its client list, because, it insisted, it didn’t have the supply it used to. But now, the list is growing. In the last two years, De Beers has added 10 names—five this year and five last year. That’s more than a 10 percent increase.

Why? De Beers’ new “dynamic” sightholder selection process gives diamantaires that consistently win its online auctions the chance to become sightholders. And these companies showed strong demand for certain articles.

(As an aside, American buyers are still not allowed to participate in these sales. In the past, U.S. companies were prohibited for legal/antitrust reasons. Those are mostly settled; yet the ban remains. “With the trade and antitrust issues behind us, this is something we are looking at,” says spokeswoman Lynette Gould.)

Back to the new policy. Looked at one way, it is fair and equitable. If you are a consistent e-auction winner, why shouldn’t you earn a place on the magic list? De Beers maintains this brings new blood and talent into the pool.

But most sightholders don’t like the policy at all. The way they see it, De Beers now has a substantial reservoir of understudies for existing clients. They fear the new policy encourages non-clients to bid extremely high (even unwise) prices so they can win the auction, become a sightholder, and enjoy the prestige and consistent supply that comes with that. And those winning bids help set the prices that De Beers charges at the sights. 

De Beers, like all companies, wants to get the most money for its products. But some think that it has extra pressure to maximize profits now that it is, for all intents and purposes, a division of Anglo-American. (In the last year, those profits were not too shabby.)

And while sightholders have complained about the profitability of De Beers assortments for decades, lately those complaints have reached fever pitch. Some have even gone beyond mere gripes and are regularly declining assortments at historically high levels. Given that one assumes most De Beers clients have efficient manufacturing and distribution systems—otherwise they wouldn’t have reached that level—and there are political ramifications to declining goods, it’s safe to say they wouldn’t turn down their sights without a good reason. 

But now if clients pass on their assortments, De Beers can sell them to the understudies. Top executives have all but told complaining clients if they are not happy with their goods, there are three companies waiting to take those items.

Of course, if you look at it from De Beers’ standpoint, there are smart reasons it wants a large, dynamic list of companies to sell to. In 2009, in the aftermath of the financial crisis, so many clients declined goods that De Beers found itself in shaky financial shape and had to take an $800 million loan from its then-trio of owners. Obviously, it never wants to end up in that position again.

But there are problems with this plan. Some are beginning to grumble that, by adding to the list companies that win (sometimes relatively small) auctions, De Beers is diminishing the prestige of being a sightholder, which has traditionally signified that a company is among the biggest and best in the business. And of course, today’s eager pay-any-price newbies might morph into tomorrow’s bitter allocation-declining veterans. Then the cycle will have to begin again.  

All of which would turn the sightholder selection process into an endless round of musical chairs. At some point, this game might run out of gas. But for now, De Beers is in charge of the music, and there is no shortage of companies willing to play. 

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