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The following is a De Beers press release: |
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The Diamond Trading Company Limited: Supplier of Choice
Yesterday, we provided our sightholders with further details of the Supplier
of Choice initiative. In addition to our general press release, we
would like to make further details of the initiative available to you and,
for your information, provide you with part of the Supplier of Choice documentation.
For client confidentiality reasons, you will appreciate that other
documentation cannot be provided.
The Supplier of Choice initiative is designed to encourage long
term growth in the retail market and the sustainable increase of rough
diamond demand with a focus on meeting the requirements and expectations
of consumers. A pivotal part of this initiative is the continued
development of our business relationships with our sightholders, with the
aim of growing consumer demand.
We are all aware of the challenges the diamond industry faces and the need
for it to evolve to help ensure it has a bright future. To help achieve
this, as part of the Supplier of Choice initiative, we have sought
to:
- introduce objective criteria for the selection of
sightholders, and confirm elements of the existing basis of supply, as
well as new arrangements;
- establish a new identity aimed at protecting our
sightholders and, ultimately, retailers and consumers and codify
protections for this identity;
- establish best practice principles to promote and
encourage high industry standards; and
- provide added value services for our sightholders.
We consider these to be important steps in continuing to develop our
business relationships. They are also critical to ensure that gem diamonds
are marketed to consumers In a way which, amongst other things, inspires
confidence in the ethical standards, and professional and technical
skills, of all the sightholders.
To meet these aims, we are introducing a Policy Statement and other
documentation clarifying the basis for
the new arrangements moving forward. In addition to the Policy Statement,
the documentation comprises
Sightholder Criteria and Other Considerations, Sightholder Criteria notes,
DTC Diamond Best Practice
Principles and new Conditions of Sale.
Addressing each of these documents in more detail in turn:
- Policy Statement
The Policy Statement is intended to reflect our aims of encouraging
long term growth in the retail market and the sustainable increase of
rough diamond demand. It is also intended to reflect both the means by
which these aims can be accomplished by industry participants, while
building on the best traditions of the industry, and the need to meet
consumers requirements and expectations.
In order to be eligible to be a sightholder under the new
arrangements, existing sightholders and potential sightholders must
satisfy, and continue to satisfy, the Sightholder Criteria and DTC
Diamond Best Practice. Principle Eligibility is also determined by
comparing the level of satisfaction of the Sightholder Criteria
attained by a sightholder with that achieved by other sightholders,
and taking into account other Considerations.
Under the Policy Statement, DTC will endeavor to meet applications for
boxes placed by sightholders. The Policy Statement also includes
further details relating to boxes, price, provision of Information,
marketing and further support and training for sightholders.
The Policy Statement recognizes that brokers have made a valuable
contribution providing independent representation to, and a
comprehensive, expert and unique service for, sightholders. DTC
welcomes the continued contribution to be made by brokers in providing
services to sightholders and sightholders represented by brokers
continue to be encouraged, in their best interests, to use a broker to
act on their behalf In all their dealings with DTC.
Sightholders will be appointed, under the new arrangements, for a
period of 24 calendar months. Each of DTC and the sightholder will be
entitled to terminate the appointment with effect from expiry of the
24 calendar month period by giving no less than 3 calendar months
prior written notice. If no such notice is given, the sightholder's
appointment will continue for consecutive 12-month periods.
- Sightholder Criteria and Other Considerations
The Sightholder Criteria comprise objective selection criteria which
will be taken into account by DTC in determining whether an applicant
Is eligible to apply for boxes. DTC will also take into account the
sightholder's level of satisfaction of the Criteria, as compared with
that achieved by other sightholders, in determining whether or not to
meet applications for boxes.
There are eight Criteria. In summary, these concern:
1. Financial Standing and Reliability;
2. Strong Market Position in relation to Particular Diamonds:
3. Distribution Ability;
4. Marketing Ability;
5. Technical Manufacturing Ability;
6. General Business Reputation;
7. Compliance with DTC Diamond Best Practice Principles: and
8. No Dealings in Non-natural Diamonds; Full Disclosure of Treatments;
No Misrepresentation of Simulants as Natural Diamonds.
As mentioned above, in determining eligibility to be a sightholder,
and in determining whether or not to meet applications for boxes, DTC
will also take into account the Sightholder Considerations. In
summary, these comprise:
9. availability of supplies, particularly of the kind(s) sought by the
applicant:
10. the efficient administration of the system for the distribution of
rough diamonds including the operation of the Sight system and all
supporting or related activities;
11. the political, legal and economic requirements of certain diamond
producing countries: and
12. the need to spread DTC's commercial risk between cutting centers.
- Sightholder Criteria Notes
The Sightholder Criteria Notes contain further detailed explanation of
certain of the Sightholder Criteria.
- DTC Diamond Best Practice Principles
The DIC Diamond Best Practice Principles are designed to ensure that
best practice is observed in the gem diamond Industry and are
consistent with our position to date in relation to conflict diamonds.
A copy of the Principles is enclosed with this letter for your
information. De Beers and DTC are committed to these Principles and
believe it to be vital that other diamond industry participants are
likewise committed.
- Conditions of Sale
DTC's new Conditions of Sale, In the main, codify existing
arrangements relating to applications, purchase procedures, price,
title, risk and delivery etc.
The new Supplier of Choice documentation will, with effect from 12
July 2001 (or such earlier date as is agreed), govern all future
arrangements with our gem sightholders. We are further considering what,
if any, changes may be appropriate to our arrangements with our industrial
sightholders. Although the new Conditions of Sale and certain of the DTC
Diamond Best Practice Principles, formulated as DTC Industrial Diamond
Best Practice Principles, will apply to industrial purchases (again, with
effect from 12 July 2001 (or such earlier date as is agreed)), pending our
further review and discussions with our industrial sightholders, the
Industrial supply arrangements will otherwise continue on the same basis
as that to date.
We are also developing additional criteria which will form the basis of
the next generation of the existing PPP programme, whereby sightholders
have been supplied on a committed basis for periods of six months.
Sightholders who satisfy these additional criteria and considerations will
be called "Forevermark Holders". This is an evolving process and
the Forevermark Holder proposals will be announced in due course.
Satisfaction of the additional criteria will lead, in particular, to more
extensive rights relating to our new identity, such as the right to
describe diamonds purchased from us as "sourced from DTC" and
the right to guaranteed supply for agreed periods. All sightholders will
have the opportunity to apply to become Forevernark Holders. Current PPP
holders will not automatically become Forevermark Holders - they will need
to satisfy the same requirements applied to all other Forevermark Holder
applicants.
Finally, in relation to the De Beers brand name, as we have indicated in
previous statements, the De Beers group will retain it name and Is
exploring the potential for a well defined, premium position, consumer
brand. Further details in this regard will be announced at a later time.
In summary, the Supplier of Choice initiative is exciting and
challenging - not only for us, but for our sightholders and their brokers.
We are confident that the Initiative will achieve its objectives and will
be enthusiastically received by the diamond industry |
