Biggest Diamond Miner De Beers On CNBC TV18 || Commodity Champions

I don't think it's particular to the diamond industry. I think at the moment there's probably a few NPA problems across many different contexts of industry. From our perspective, we've been on a journey for quite a while, actually. I think one of the biggest issues is ensuring that we have greater transparency. Certainly from a De Beers perspective, when we launched our latest sight holder contract back in 2014, we were very much around the fact that we wanted to ensure greater compliance to IFRS stock audits, making sure there's greater transparency to ensure that our sight holders — specifically on the broader industry's bank loans in the future. So we've been on this journey for a while, but let's face it, it doesn't happen overnight, and I think we have to understand that we're getting better.

I think it's a collaboration. I think that's a learning coming from me — there's no one side going to fix this on its own. We need to see the industry coming together both with government from a regulatory perspective, but also the banks need to come to the party as well. I think it's about how we make this work for the whole industry. This industry is tremendously important to India — as I said earlier, 70% of all diamonds by value are manufactured here, and likely it's going to continue in that perspective. So it's desperately important to De Beers and the mining industry as well, and we want to be a part of that discussion. As I said, we've started on this road of transparency. I think from our customer base, we're certainly on the right journey — well over 60% are now compliant, and certainly by the end of this financial year we'll see the rest of them. We hope all of them — if not, then we'll obviously lose a couple of clients — but certainly the majority will meet financial compliance, which I think will help the whole industry as well and will be something to hopefully emulate throughout the rest of the secondary parties.

Really, look, we've had a couple of different years, if you like. If you recall going back to 2015, we did see a dip in global demand for diamonds. It was part of the overall change, particularly in China, which we saw the greatest impact. But we've been on a gradual recovery from that. I think perhaps from an India perspective, one of the issues has been more around the midstream noise. As I said, I think we had a little bit too much polish within the midstream — we'd over-supplied with over-manufactured product. And I think the last two years have been about finding the right balance. For me, coming into this year, it really is the fact that I think that balance is coming into play. We now need to make sure that we make the best of it.

The US remains by far the strongest consumer, and in fact some of the recent changes — certain tax reforms in the States — has created additional income for our consumers, and we're seeing that actually play through. So America is about 50% of the market. I think what's really encouraged at the moment is seeing China come back again — we've seen positive growth there. And likewise, I think India is an exciting consumer market. Basically, I mean domestically, I don't think we're seeing it come to its true potential — a long way.

Look, we haven't seen significant growth in India — that's been disappointing. I'm not entirely sure why that is, but we certainly plan to come back with trying to market more. When I say we haven't seen growth, I mean as an overall industry. I have to say that the Forevermark brand, the De Beers brand, has done exceptionally well — it's really taking off. And I think we're seeing certainly a younger set of consumers starting to buy diamonds in a different way. But clearly the majority of product in India is the wedding part of the jewellery, and I think that's still consistent. We want to see that growing more, getting more excited about the product. And with that, we're doing a much greater marketing campaign in India as well. We're working with the Diamond Producers Association and the Gem & Jewellery Council in order to invest a little bit more and really try and bring diamonds back to life as well — also for the millennial generation.

I'm not sure it's competition — they're quite different purchases. I think gold is bought for two reasons in India: one is from a jewellery perspective, but also from a longer-term investment perspective. Diamonds are very much around the jewellery — it's around the adornment. I think we need to see greater differentiation. I think there's some exciting opportunities coming in India around different design. I think we're seeing both traditional and almost a fusion of European and Western design coming together. I think that's what's really exciting for the whole diamond industry here.

Yeah, we've seen a retraction from some of the major banks — Standard Chartered has been one that has pulled back, and ABN and others have kind of reduced some of their exposure. On the other hand, we see new banks coming to market, particularly out of Dubai. And also we've seen alternative forms of investment — bonds and the transparency that's been created in a number of our sight holders taking a very different approach to financing, much more long-term outside investment. And I think that's the future — it's a mixture of both. It's all about confidence. You know, if that transparency is there, then we feel confident enough to invest. And I think that's where the diamond industry needs to continue on its journey — maturing to basically a normalised business.

We've been investing heavily in mines where we have to ensure those repairs, and it is profitable. Yes, it is. Obviously, De Beers has had a reasonably good couple of years, to be honest. But at the same time, we're investing heavily in Venetia in South Africa — it's a billion dollars of investment that we've put into that — and likewise into Jwaneng, similar amounts, to make sure that we've got diamond supplies going into the future. The diamond industry is a very long-term industry, a bit like the product — it's about relationships in the long term. The investment is the same: you don't get a return immediately. But we're very confident that diamonds are here forever.

Well, we do hold those conversations regularly with the bankers, and clearly the journey we've been on has been very well supported by the bankers. We go to a number of conferences. I think it really is about that continued transparency, understanding your customer. I think one of the issues we've mentioned to most banks is: we don't invest in the industry — you invest in a business, in a company. You know, as was being mentioned, from the interior the Indian industry has, right now diamonds perhaps is just 1% of it. But it really is about the perception — how does one change that? What diamonds are — they're a very valuable product, they're a very emotional product, and they tend to be very focused. To one extent that's a great thing because that's about marketing. But I think it is about looking at it as a business, and as I said, as an industry we need to make sure we are transparent and we need to make sure that banking and financial institutions — we don't just look at the whole industry, don't look at a few bad apples in the pot, so to speak. Let's look at the whole, and that's really then coming to understand each business on its own merits. Let's do our due diligence to make sure that we understand them and then invest in them. There's some really good companies out there doing it exceptionally well, particularly in India.

I think we've got a great growth opportunity. As I said, we've got one of the best platforms at the beginning of this year that we've had for a number of years, where we see ourselves in balance. The opportunity for me is how do we take that forward, and that is about creating trust — trust in our banking, trust in our businesses, trust for our consumers. So it's all about trust at the end of the day, and transparency.

Look, I think we've seen polished prices really slightly weaker for five years, and certainly in the beginning of this year we've seen the opposite trend. So as demand and supply comes into balance, I think we're seeing polished prices rise, which is a good thing — it gives us all much more confidence. And they seem to be very, very stable at the moment. Likewise, that's pulling through rough prices as well, which, from a mining perspective, is encouraging. And when I look at the demand-supply into the future, I see a very optimistic view of the world. I think we're going to be in balance — our operations are set to literally mine to demand. So we think we've got back to that balance. It's about making sure we maintain that — not over-supply or under-supply — making that equally balanced.

No, they're not coming recently. We, as I said, did close one mine in Canada, but then again we opened a new one in Botswana. We constantly, from a diverse perspective, have investments in exploration, and we're looking both in countries where we're operating and further afield. There are projections — not ourselves, but another producer — opening up a new mine, probably three or four years or so. But that's something you'll find every day. And a lot more of our investment is in ensuring that the assets we have, which are world-class, that we look after those assets to make sure that we've got longer-term supply into the future as well. Not to say that we're not constantly looking for new opportunities and new mines, and the technology is not far away.

Look, I think there's a lot around provenance — understand where your diamonds come from, and ensuring that again that transparency is there. Blockchain will, we believe, certainly offer that going forward. It will ensure that at a consumer level you can be confident that your natural diamond has come from where you believe it to have come from. We're not fully there with the technology yet — we're still in a pilot case. We've announced ahead of time, we're investing a lot of effort in ensuring that we can really give consumer confidence to our product and create that chain of custody all the way through. So it's an exciting opportunity. The technology isn't working as it should be yet, and I think technology will come to the fore more and more in the industry. We've seen tremendous utilisation of technology in India and likewise in beneficiation, in cutting and polishing. But the next stage is also marketing — how is the internet playing? How do we make sure that we've got omnichannel coming through the system? So the whole space in which we operate within diamonds is as exciting as anything else, and we need to be right at the forefront.

Thank you. Real pleasure. Thank you very much.