By Charles Wyndham    .

News that BHP is going to be using the new Sarin Technology for its sales in future is more than welcome.

I should qualify that statement by saying more than welcome to me, but I would not be surprised that there are those who do not buy and even those that do buy from BHP who will be taking a very contrary view.

The Sarin technology reduces the risk substantially in estimating the outcome of a piece of rough into polished by highlighting most (I gather not all, for the moment) problems in a piece of larger rough, larger means not, as I understand, above 20 carats or so.

No doubt there will be incessant whinging that this removes the mystique from buying the rough, removes the illusion and deskills the business etc etc, ad nauseam, all the same arguments that are put against the concept of tenders, namely the adverse effects or consequences of a more transparent system.

Transparency is what allowed BHP to post such good figures in 2009, compared to those of De Beers which wallows in its own mud pool of deliberate obfuscation, masked as righteous proprietorial behaviour, as being the party that sets the industry’s standards, which sadly is actually quite true in many ways.

BHP posted an underlying earnings increase of more than double compared to an almost halving of De Beers profits after EBITDA, if ever there was proof in the pudding that must be it.

Reducing risk to the buyer in purchasing of rough will inevitably increase the price to the seller.

In fact, throughout our industry the more transparency there is, the greater the potential for profit, though not necessarily the greater profit for those currently making the greatest profits.

The underlying inefficiencies of our industry inevitably favour some more than others, just as efficiencies will favour the competent and not necessarily the best connected.

More transparency will dramatically grow the cake, which one would have thought would be applauded by one and all, but this knee jerk reaction is one of hope over reality.

The essence of a monopoly is that it under prices not that it overprices.

By under-pricing a monopoly drives out competition which then allows it to control a market and make the desired profits through its scale which, either the profit or the scale, would not be possible if the pricing was realistic and which would not allow this artificial skew to the market.

I have not been able to understand the rational of De Beers to have been selling so cheaply since the market picked up after the first quarter of 2009.

De Beers, as its 2009 results have shown, are desperate for cash; its market share, I would have presumed, would have sunk in priority to them, just as in reality it has anyway, against the desperate need for cash.

The only other possible explanation that I can think of in the context of this aberrant behaviour is that there is another agenda leading up to the contract negotiations in Botswana.

Whatever the motivations for De Beers, bravely assuming that it is not just simple incompetence, nothing takes away from another incisive step taken by BHP in moving the industry towards greater transparency and therefore greater opportunity.