http://www.ft.com/intl/companies/mining
De Beers is making the biggest reforms in more than a decade to the way it sells most of its diamonds, amid concerns over the financial stability and transparency of some of its best customers.
The diamond group, which sells $6bn of unpolished diamonds annually and is the world’s largest supplier by value, is introducing tougher rules for companies wanting to join its coveted group of customers known as “sightholders”.
Under the new rules, expected to be announced this week, sightholders will have to present their accounts according to international standards. De Beers will also insist customers hold a specified proportion of equity in their businesses, making them less reliant on bank borrowing.
De Beers sells about 90 per cent of its mined output to sightholders, which play a vital role in the diamond trade, cutting and polishing rough stones and channelling them into global jewellery markets.
Only about 80 companies — most from traditional diamond trading and polishing centres such as Antwerp, Israel or India — are approved by De Beers to become sightholders and take part in regular sales, or “sights”, each year where they buy rough stones.
Bruce Cleaver, De Beers’ executive head of strategy, said the diamond company wanted to bring its customers “into the 21st century” and that it was “important for the industry to evolve more towards transparency and governance”.
He added that De Beers has also been worried “about the financial robustness of some of our customers”.
In the past two years, banks have been cutting credit lines to the diamond trade, with one major source of financing — Antwerp Diamond Bank — closing to new business in September. The liquidity squeeze contributed to a sharp fall in rough diamond prices last year.
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