Jeweller Magazine asked for my thoughts on how Rio Tinto’s new diamond-selling system would impact the industry. See my response in the second half of the article below:
Rio Tinto Diamonds has launched a sales platform where a portion of its Canadian Diavik production will be offered to parties outside of its usual supply agreements with diamond dealers.
While the majority of the company’s diamonds will continue to be sold through supply agreements, the new online auction system allows specific product segments to be available to a wider community of invited companies.
“The new auction platform complements our existing business model of placing a majority of our production through supply agreements, with a more limited proportion of production made available for sale to a wider selection of customers,” Rio Tinto Diamonds general manager of sales Patrick Coppens said.
According to the company, the new mechanism aims to increase the efficiency for diamond dealers’ rough sourcing activities.
“The design of the platform is based on extensive customer feedback, which clearly stated that our customers would value a user-friendly and time-efficient system,” Coppens added.
Participants can manage their product portfolio and budget allocation decisions in real time, while getting instant feedback on their bids.
Rami Baron, president of the Diamond Dealers Club of Australia and executive council member of the World Federation of Diamond Bourses (WFDB), told Jeweller that the new trading platform would impact the industry in a variety of ways.
“If I view this from my executive role on the WFDB, I see this as a positive step if the implication was that smaller or mid-size manufacturers can access rough goods that previously they did not have access to.”
Baron added, however, “the constant problem for the diamond manufacturer is the lack of steady supply of consistent goods and consistent prices for their polishing factories. My impression is that this is not the goal of the new platform.”
He said that from his understanding, the initiative would have no impact on Australian jewellers, or the access that Australian jewellers would have to “special diamonds”.
“We need to remember that although Rio Tinto is listed on the ASX, 99 per cent of its production is sent to its offices in Belgium where it is distributed to the international market. Australian consumption of diamonds absorbs approximately 1 per cent.”
The first application of the platform occurred in April this year, and Rio Tinto Diamonds reported a record participation, strong sale results and positive customer feedback.
Rio Tinto Diamonds is one of the world’s largest diamond producers. It has mining interests in Australia, Canada, Zimbabwe and India.