By Charles Wyndham.
My skiing ability is limited, some might argue that that is a comment that should not be applied only to my skiing, but I think it would be presumptuous on my part to agree.
Taking a wrong turning to find myself slithering down a black run when pink is my standard was quite exciting.
At least I got back in one piece, which was a bit of triumph, so I thought, that was until I read an interview given by Monsieur Mellier and Stephen Lussier of De Beers to the JCK.
Concussion might have been a better preparation for reading the responses to some perfectly reasonable questions.
Some leeway has to be given to Monsieur Mellier given that he has not been around in the diamond business that long, but to read again that due to the “success” of the Forevermark and De Beers Jewellery they “have knowledge of total demand… (which) will enable (De Beers) to produce to demand”, was pretty awe inspiring.
“Success”, that is the first time that I have heard that word being used in relation to De Beers Jewellery, which did not make a profit in its first ten years of existence, as with this tit bit of information my views about the Forevermark have been expressed before.
JCK questioned whether it was not in fact nature that governed production, but Mellier doggedly stuck to his guns and said that De Beers had the tools to “know what was potentially in the ground. So we can put some emphasis on one mine versus another. We are now able to produce with a great deal of precision. And we are able to develop tools that will give us the right type of precision.”
I suppose that it was this precision which has resulted in such cataclysmic mining disasters at Venetia and Jwaneng, to name but two mines that would appear to be behind the dramatic drop in goods being offered for sale at the coming sight and seemingly into the a few more as well.
Another interpretation of ‘precision’ is of course that soon De Beers will only want to produce cultured diamonds.
The argument that owning a high end jewellery outlet provides meaningful information about rough diamond prices is simply bonkers, a fact that has been successfully proved by De Beers inability to price its own rough, even with this ‘assistance’.
The news that Harry Winston is selling its watch and diamond retail business only adds weight to the argument that this is not an overwhelming positive for a mining company, though in Harry Winston’s case they seem to have been able to get a good price for a successful part of the business to focus on mining.
Common sense shouts that this is not an argument that can be taken seriously and also common sense raises at the very least, serious questions about being able ‘to produce to demand.’
What this producing to demand implies to me is ‘high grading’, which is not something that would go down too well with the various countries in which De Beers mines.
Another point that various governments might find unpalatable is the idea that ‘emphasis’ is placed on one mine and not another at anyone time, let alone if dictated by the vagaries of an ever fluctuating market, even without it being misinterpreted.
The raison d’etre of the odd mining lease that I have read is that each mine is exploited to maximize its long term potential.
The very concept of favouring one mine over another seems to run in the face of the rational as to why any government would want De Beers to be their diamond miner or to use that company’s own euphemism ‘Partner of Choice’.
It also seems to run a coach and horses through the concept of one selling mix and the role of selling all the diamonds that are produced.
Having read this interview, if I were a government, I would be asking for some detailed explanations of what Monsieur Mellier means, that is if he knows himself.
Unlike me, I hope that he has not taken a wrong turning and is sliding down a very steep black slope.