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DTC’s Ambitious New Strategy Elucidated at London Party
Nicky Oppenheimer, Gareth Penny & Varda Shine Address Sightholders
By: Diamond World News Service
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Mar 15 2008 3:42AM
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Reference: 2358  

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At a sparkling evening in London on January 21, 2008, DTC Sightholders listened to Nicky Oppenheimer, Gareth Penny and Varda Shine as they spoke of the achievements De Beers and the DTC had made in 2007, and the challenging and exciting year that lies ahead.

Nicky Oppenheimer, De Beers Chairman, welcomed guests by saying that 2008 is going to be an important year for everyone present, not least with the beginning of the new contract period in April. He said he was sad that several close personal friends of his would no longer be buying diamonds directly from De Beers when the new contract period starts, but that he hoped those friendships would endure. “At the same time,” he said, “it is exciting to welcome new players who I am sure will add lustre and vibrancy to the industry as a whole” he added. Varda has kept me closely in touch with the whole process and she and her team have met every challenge I placed before them. They have been rigorous and honest throughout. Her task has not been easy and I salute her and her team for the way they have handled a difficult situation.”

India, China, Middle-East Rising Stars :
He spoke about the huge importance of the emergence of India, China and the Middle-East as major diamond buyers and said that the fact that these ‘new’ players will be a balance to the USA should give us all great confidence.

Gareth Penny, De Beers Managing Director, opened his remarks by saying that, in 2007, De Beers made further improvements in its quest to find and deliver new deposits of rough diamonds, whilst ensuring that our existing operations continue to provide world-class supplies in a financially sustainable way.

Many New Mines to be Opened :
“As we look forward to opening several new mines this year, we have also sold on some of our operations that no longer fit with the business model we seek to deploy. To attain profitable growth, we must remain aware of costs. As India and China continue to register outstanding economic growth, their demand for finite supplies of natural resources has resulted in higher resource prices,” he said.

Consumer Confidence Important :
All these efforts come to nought if we do not continue to instil confidence in the consumer and uphold and protect the reputation of diamonds. Through our collective involvement in the World Diamond Council, we have been forefront in providing solutions that now see diamonds as one of the most monitored and audited natural resources in the world.

“Government leaders, including the G8 Group of Nations, are seeking our advice on how to provide assurance and security in the distribution of other valuable resources. We have done the right thing and are, at last, beginning to reap the dividends. However, we must not jeopardize this success. Although we may have effectively contained many of the risks we face in this area, those risks will never be far away. Complacency is now our greatest enemy.”

“Yes, there will continue to be some uncomfortable moments and hard decisions to make, but I am equally confident that eventually the rewards will exceed the various sacrifices we have all had to make,” he concluded.

Varda Shine, DTC Managing Director, offered to share her thoughts about the journey on which everyone will be embarking as we start the new contract period, “I believe that the new Sightholder contract was implemented fairly and objectively, applying the same rules to every applicant. I believe too that it has resulted in a list of diverse, quality Sightholders that are best placed for future success, particularly in the current environment of constrained supply.”

Parting Uneasy :
She admitted that change has not been easy for anybody, “especially those well run and well managed companies that the DTC would like to supply, if only we had enough diamonds to do so. These were not easy decisions but I know they were the right decisions.”

New Family of Companies

Talking about the achievements of the past year Varda highlighted the new commercial strategy for the DTC, one that entirely supports our overall strategy of growing demand, of improving pipeline efficiencies and of adding value to diamonds. “This commercial strategy has resulted in a new structure for the DTC. We are no longer the old London based company. We are now a family of companies with sales operations in four countries. A family of companies focused on two goals - working with those clients best able to add value to the diamonds we sell and helping our producer partners to achieve their legitimate aspirations to create sustainable downstream diamond industries in their country.”

Referring to the DTC policy towards its producer partners, Varda said, “It is not a question of policy or even about doing what we feel is right. It is about facing our commercial realities and meeting the expectations and requirements of consumers – our ultimate bosses.”

“Over the past year we have successfully created and implemented the new Sightholder contract process. I make this point because it reflects something close to my heart , and something I said this time last year, our desire to build a new relationship, a more mature partnership between the DTC and its clients. One based on greater transparency, on mutual understanding and on commercial opportunities that would benefit both us and you.

Partnership & Excellence :
She went on to say that what DTC is offering can be summed up in two words - partnership and excellence - and DTC expects the same in return. A third requirement is financial, professional and ethical accountability. “You know that we will only be confirming supply contracts following the completion of third party verification of your contract proposals. We are setting high standards for ourselves … and we expect you to share those standards.”

“In 2008”, she said, “DTC Botswana will be opening its new building in Gaborone and we will be working on our plans to transfer aggregation from London to their fantastic new facility in 2009. The new Sightholder contract will mark the completion of major period of change in the structure of our business relationship with you, our clients.”

Joint Ventures :
Our joint ventures with the Governments of Namibia and Botswana are start up businesses. They have access to the knowledge and expertise of the DTC and will adapt as lessons are learnt. Together, the DTC, its producer partners and the Sightholders with operations in these countries will continue to seek ways of maximizing the value of diamonds and work together to ensure that a sustainable downstream business is created.”

Varda continued; “Over the next few months the DTC will communicate the way in which it offers those goods that do not lend themselves to distribution through the ITO system such as Sight buy-backs, refusals and other goods. We are already considering a wide range of options, and, as we move into the new contract period, we will be reviewing the way in which we offer ex-plan goods for sale. At this stage, we are not ruling out any options,” she said.

Varda then updated the audience on the FOREVERMARK and the changes in the way this will operate.

Initiatives Underlined :
De Beers Group Marketing will continue to build consumer demand for diamonds, maintain consumer confidence and build and develop the FOREVERMARK. The FOREVERMARK will become a universal brand, the definitive point of reference in the industry and in the minds of consumers.

“As you know, in future participation in the FOREVERMARK will be open to all eligible diamantaires and not just DTC Sightholders. This means that existing and new DTC Sightholders through their continuing compliance with the Best Practice Principles will meet one of the fundamental criteria to be a FOREVERMARK diamantaire,” she said.

Changing Pricing Pattern :
Varda’s final point was on pricing.“As we did in the second half of last year, we will continue to have a more dynamic approach to pricing and will review our prices on a Sight by Sight basis. We will communicate price changes at 3 touch points throughout the year; in February, during our annual results meeting, and ahead of the 2 major trade shows of Las Vegas and Hong Kong”.

Whilst DTC has changed structurally in the last year – our ultimate vision and strategy remain the same. We want to maintain our position as the world’s most efficient and leading distributor of rough diamonds.

Emphasis on Adding Value :
We will continue to add value - to you, our clients - and to our producer partners. None of this will change. However we also want to be better known for other qualities, such as being an icon of ethical standards that reflect well on all associated with us. We want to ensure that consumers have absolute confidence in the cutting and polishing segment of the diamond pipeline.

First Choice Rough Supplier :
And we want to be acknowledged as an unparalleled expert in rough diamonds, with world renowned intellectual property. For you the most important ambition is that we are known for excellent client service and the first choice of rough diamond supplier.

Varda concluded her remarks by encouraging the Sightholders to give the DTC feedback on how they think it is performing and it can continue to improve.

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