Gaborone: The De Beers Group of Companies today began its 2015-2018 Global Sightholder Sales (GSS) contract period. In addition to the 84 Sightholders, the company also added two companies to its newest client category, the Accredited Buyers, reports idexonline.
While Sightholders qualify for term contract supply (provided via the Intention to Offer or ITO planning process), Accredited Buyers can purchase rough diamonds on a more ad hoc basis via ‘ex-plan’ availability (which is also available to Sightholders).
De Beers stressed that the selection process for this sales period included greater financial compliance requirements. Clients no have to comply with International Financial Reporting Standards (IFRS) consolidation standards, they have to achieve unqualified audit sign-off from a GSS-approved auditor on their financial data and they must maintain a maximum debt to equity ratio of 70/30 percent.
Nigel Simson, senior vice president of Sales and Sightholder Services, told IDEX Online that this final requirement is intended to dial out some of the volatility in the industry where cash flow has been driving behavior in the market. “We want to see an industry able to survive through the downturns,” he said.
While the two Accredited Buyer clients have already reached these new financial standards, and the company expects their number to increase as others become compliant, Simson explained that the Sightholders have until the end of their 2016 financial year to become fully financially compliant.
In the meantime, he said, they have to show a coherent set of roadmaps to attaining compliance and that De Beers will work with its existing clients to help them meet these necessary milestones.
Simson said the new system allows for greater flexibility and allows businesses to evolve; Accredited Buyers could become Sightholders and it could be that some Sightholders find that the Accredited Buyer system makes more sense to their particular business model.
In addition, companies will have the opportunity to qualify as an Accredited Buyer at any point over the contract period, once they have met the compliance requirements.
The updated GSS customer list will be published for the first Sight of the 2015-2018 supply agreement, which will take place from May 4-8.