OWN CORRESPONDENT, Johannesburg | Monday 5.00pm.
THE $4-billion diamond stockpile held by industry giant De Beers has become a burden on the company and it is to review the way it tries to steer the world market, chairman Nicky Oppenheimer said.
Writing in the company’s annual report which was released in Johannesburg on Monday, he said its inventories are too high and it is looking for a more refined marketing mechanism.
”A measure which De Beers devised to protect its own interests and the interests of its stakeholders must be adapted and refined…The buffer stocks which it held against market volatility became instead the burden of swollen inventories,” Oppenheimer said.
Oppenheimer said this did not mean the firm, which controls more than 60% of the rough diamond market through its London-based Central Selling Organisation, is abandoning its market role.
”This does not mean that De Beers is about to abandon the market to its own devices. To do so would be self-defeating.
”It does mean abandoning a broad-brush approach to matching supply and demand for a more finely calibrated instrument designed primarily to serve the interests of De Beers and its main clients,” Oppenheimer said.
De Beers last month said an appropriate working stockpile level for the firm is around $2,5-billion and has previously said that stoking global demand, rather than simply buying global diamond supplies and restricting supply to cutting centres and retail outlets, is a key policy. — Reuters