October 15, 2001
De Beers Cuts Sales Goals
De Beers Investments, which had had a sales goal of $4.8 billion this year, is revising its projections. "It's no secret our sales target is off and as a result we've had to scale it down," says Andy Lamont, a De Beers spokesperson. De Beers has not announced a new sales goal but says diamond sales for the first half of 2001 were down by almost 26% in relation to estimated sales.
"We all knew there had to be a change in allocations before the last diamond sight on the Sept. 25," Lamont says. "So on the production side we are slowing operations at the mines or alternately mining areas of the pipes known to produce lower-value goods. We are doing this to keep mining going as a continuous operation." Lamont says De Beers has instituted mining quotas to reduce supplies for the company and sightholders. "We are committed not to build up stocks. The favored way to do this is to stock in ground, by slowing down the mining pace without stopping it," he explains. De Beers says the quotas are modest.
While sales goals were scaled down last month, the goals did not take into consideration the terrorist attacks on the U.S. or the effects of the U.S. economy. Many economists have asserted the U.S. economy was pushed into recession as a result of the attacks. "Who could have anticipated or predicted the terrible events on Sept. 11? We still do not fully know what the effects of the attack will be, so we all have to adopt a flexible approach," Lamont says. De Beers says it hopes its policies on reducing market oversupply will have a positive effect on diamond price stability and profitability throughout the diamond supply chain.
Meanwhile, talks with European Commission executives regarding De Beers Supplier of Choice strategy are ongoing. "We remain hopeful for a positive outcome," Lamont says.
- by Robert Weldon, G.G.