There is a saying which goes: “Only the paranoid survive”. This rings true for De Beers’ recent move, lock, stock and barrel.
The diamond mining giant’s about-face in business approach, which has focused in mined diamonds, has stunned analysts, to say the least. For those not in the know, the organisation has announced that it has started manufacturing diamonds from its Berkshire laboratory in the UK.
For years, De Beers flippantly dismissed the threat synthetic diamonds, then in its infancy, posed. In about 2000, the late Louis Nchindo, then the managing director of Debswana, Botswana’s diamond mining company, told a hastily assembled press briefing at the company’s head office in Gaborone, when responding to a question from a journalist that there was no way synthetic diamonds would pose a threat to real diamond. “There is no substitute to real diamonds. People attach more value to the real thing…synthetics do now worry us the least bit,” something along these lines.
A changing market
But a lot has changed since this pronouncement was made almost two decades ago. Unlike their baby boomer parents, the so-called millennial generation does not mind the type of diamond their engagement is made of, as long as it is ethically sourced. This cohort is now considered the diamond market’s next frontier that producers and marketers can ignore at their own peril.
In 2016, a former senior official of the Government of Botswana, David Magang, warned that synthetic diamonds posed a big threat to the Botswana economy’s overdependence on diamond exports, an opinion which was not very popular then in some quarters. “Synthetics represent one of the greatest threats to Botswana’s economic well-being for the ramifications are that even if our mines were to continue to be operational for the next 100 years, no one would buy our diamonds if synthetics became fashionable,” Magang said.
With time, the rising capital and the expenditure costs would render operating diamond mines unsustainable. The cost of mining has become expensive, increasingly, most diamond-rich deposits can be accessed at deep-level. Previously, there were plentiful near the surface. This speaks volumes why Debswana has resorted to reclaiming diamond from waste material at its operation in Jwaneng.
Adjusting to the new reality
Magang predicted that De Beers would have to enter the flourishing synthetic diamonds market, if it were to stay relevant. Wisely, instead of being in denial about persistent threats to the diamond trading market, De Beers has adjusted to the new reality. One wouldn’t dispute that De Beers must have learnt from observing the fortunes of Nokia, the Finnish multinational telecommunications, information technology, and consumer Electronics Company.
In 2000, Nokia, then the biggest supplier of handsets to the mobile telephone market, believed it had an invincible position in the market. It was on easy street, judging from its failure to keep abreast of the times, ostensibly, dismissing the threats of new players, as inconsequential. Through innovative features and aggressive market, slowly, the new savvier players encroached on Nokia’s niche market, and toppled the Finish company off its perch. Apparently, De Beers is determined to steer itself off a similar trajectory.