Closing in on a deal
De Beers pleased with third of Ekati diamonds
NNSL (May 31/99) - The world's largest diamond firm is nearing completing a purchasing deal with Canada's first diamond mine, a top De Beers Canada executive said.
De Beers is in the "final stages" of completing a deal in which it would buy 35 per cent of rough diamond production from BHP-Dia Met Minerals Ekati diamond mine at Lac de Gras, Tom Beardmore-Gray, senior vice-president of De Beers Canada, said.
"We're very pleased with that," he said.
Beardmore-Gray, who has been with Vancouver-based De Beers Canada for 18 months, declined to comment further on the deal as it has not been finalized.
Through the CSO, De Beers has been able to control the world's diamond supply. The company argues that the CSO has provided diamond market stability for 70 years.
De Beers, through its 20 diamond mines in South Africa, produced 31.3 million carats, about half the world's rough diamond production, in 1998. Some 18,000 people work for De Beers.
Among the challenges De Beers faces is the rapid growth of rough diamond production, Beardmore-Gray said.
In 1980, rough production stood at 62 million carats worldwide.
By 1998, some 120 million carats of rough diamonds were produced by mines around the world.
Sales of diamond jewelry in 1980 was $21 billion US compared to $50 billion US today, he said.
Another challenge is slumping sales.
Sales of rough gems by the CSO in 1998 were $3.35 billion US, down 28 per cent from 1997 sales of $4.64 billion US.
But with the millennium approaching, diamond sales are likely about to change significantly.
In the coming months, De Beers, which markets 70 per cent of the world's diamonds, will market the millennium opportunity.
In the final three months of 1999, De Beers will spend 40 per cent of its annual marketing budget on its millennium advertising. For 1999, De Beers has budgeted about $175 million US for marketing.
Slogans like "show her you love her for the next thousand years" and "what are you waiting for, the year 3000?" will be on television, in print and at various other avenues.
De Beers will stress the "durability" of diamonds and the "meaning" of the occasion, De Beers marketing director Mary Walsh said.
Diamonds will be shown as a "symbol as opposed to a souvenir," she said.
Over the next eight months, De Beers will promote diamonds as a way for people to mark the millennium. In the year 2000, the marketing will then shift to diamonds as a way for individuals to celebrate anniversaries, birthdays and other occasions during the year. Because of their buoyant economies, North America and Europe will be De Beers' target markets.
In these markets in the year 2000, Walsh, who is based in London, said there will be seven million engagements, 28 million weddings, 69 million births and 880 million anniversaries.
If just one in 200 among this group buys a diamond to mark the occasion, world diamond sales will jump 10 per cent, she said.
Walsh, and Beardmore-Gray spoke Wednesday at a Yellowknife Chamber of Commerce luncheon.