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Broadcast
12th July 2000
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DE
BEERS ABANDONS DIAMOND CARTEL
The De Beers diamond cartel is no more. The South African diamond
group has made its biggest change in focus in more than 70 years.
From now on, it will cease to support world diamond prices by buying
up and stockpiling gems, and will instead concentrate on ehnancing
demand for gems, by persuading the jewellery industry to spend much
more on advertising.
Our presenter Rodney Smith has been following the diamond mining business
for 20 years and he spent the day talking to the people involved,
assessing how big a change this really is?
"We do not know what will happen but De Beers is saying this is a
complete change. I think they are going to change and they are having
to change.
The changes are being forced on it by major changes in its industry.
The so-called 'blood diamonds' of Africa, which are fuelling wars
there, the development of large new diamond discoveries not under
De Beers own control, and the emergence of a powerful new competitor
from Israel, Lev Leviev, who is squeezing De Beers out of Angola and
possibly Russia."
De Beers spokesman Andy Lamont, says the company realised the time
had come for change:
"Certainly, from a diamond industry point of view, we have seen
in the last ten years very disappointing growth rates. We would like
to see the diamond industry match the growth rates of the luxury goods
sector - that is about ten per cent per annum."
Rodney Smith asked if De Beers was aiming for the high ground in the
diamond market - that is, develop a brand name, develop an image which
will guarantee stones at the top of the market and let the rest of
the market operate in some other way - effectively creating a two-tier
diamond market?
"Of course we are not creating a two-tier diamond market. We produce
diamonds across the range and, quite honestly, what we are trying
to do is position diamonds where they absolutely belong. They stand
for purity and integrity and these sort of things and I think that
is what our announcement today is about."
he government and a different way of selling to private individuals
will be looked into."
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It is about working as best as we can with the best, and
also to ensure that consumers have confidence in diamonds."
Andy
Lamont
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So you are not acting as a buyer of last resort in the diamond market,
you are effectively abandoning the cartel and aiming instead to really
push demand through advanced advertising by yourselves and by the
other site holders. Was this a change of focus to develop a brand
image? Rodney Smith inquired.
"We see brands as a vitally important catalyst to reinvigorate the
diamond industry and in five years time we would like to see an environment
where there is multiple competing brands and we believe that in time,
when we are able to announce it, our brand will be amongst the high
niche end of the market."
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Llook at the watch or perfume industry, what typifies those
industries is competing brands, so this will be good for jewellery
sales."
Andy
Lamont
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| The
Markets: 20:23 GMT |
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FTSE |
6406.80 |
-11.00 |
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Dow Jones |
12525.7 |
-48.11 |
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Nasdaq |
2467.70 |
-9.91 |
| Data delayed at least 15 minutes. |
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Beers Diamonds |
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