Special guest blogger Ben Janowski, a longtime diamond industry consultant and occasional JCK contributor, helms the Cutting Remarks blog while Rob Bates is on leave:

In the past two decades, we have witnessed the gradual transition of De Beers from an ivory-towered monopoly to a commercial venture struggling to shake off its past and find a new way.

Now, in nearly a single stroke, De Beers has made the final cuts, leaving many in the trade speculating that the one-time cartel may be facing its ultimate decline.

What are these cuts? On Nov. 11, De Beers conducted its first sight in Gaborone, the capital of Botswana. London is no longer the sales center. About two-thirds of all Diamond Trading Company employees will not be moving to Gaborone, many of them long-time employees with valuable relationships and historical perspectives. 

And it was announced recently that Varda Shine, manager of global sales, will be stepping down at the end of the year. She is seen as the last top management officer who has a strong grasp of the peculiar dynamics of the diamond business. 

Many in the industry view this massive change in the composition of De Beers sales staff as a huge risk. Botswana does not have an infrastructure remotely close to that provided in London. Whether the government can build that is a real question. It has not done so in the years leading up to this moment. 

It is to be noted that De Beers probably had no choice, though for years it tried to counter the beneficiation push demanded by Botswana. But Botswana now owns 25 percent of De Beers, is a 50-50 partner on all the mining done there, and will run its own auctions, beginning with 15 percent of production. And Botswana is by far the most important piece of De Beers’ business. 

However, even as Botswana moves ahead to acquire the skills necessary to take over more of the management of sales, even its own government admits that its diamond business cannot be its total future. The mines will decline in output, and in the next 20 years or so the country will need to find a new way to drive the economy.

Obviously, De Beers knows that as well. So the question is, what is their long-term plan? And will a declining asset, already a small part of majority owner Anglo American’s holidngs, be of continuing interest?  

JCK