De Beers has announced plans to reduce the number of sightholders in its next supply agreement, which will take effect from January 2026, citing a decline in available rough diamonds as the primary reason.
The changes were communicated in a letter dated 20 September, following a sightholder event at the Hong Kong Jewellery & Gem Fair, according to industry analyst Avi Krawitz.
Strategic Realignment Amid Declining Rough Availability
The forthcoming reduction in sightholder numbers will be determined by a new selection and allocation process, with De Beers stating that the objective process aims to adapt to anticipated lower availability of rough diamonds under the sightholder supply model. The diamond producer has steadily decreased its sightholder count over the past few decades, from a peak of around 350 in the 1970s to the current figure of approximately 60.
The changes come as the company prepares for a new marketing agreement with the Botswana government. Under the terms of the agreement, state-owned Okavango Diamond Company (ODC) will gradually increase its share of production from Debswana, a joint venture between De Beers and the government. ODC’s share will rise from the current 25% to 50% over the next decade, significantly reducing the volume of rough diamonds available for De Beers to supply to its sightholders.
Implications for Sightholders
De Beers’ decision to reduce sightholder numbers is a response to challenges in the rough diamond market, including weak demand. The company has implemented flexible sales policies and adjusted sight schedules, such as merging its August and October sales into a single event after the Hong Kong show, to manage supply.
Sightholders have faced limited opportunities in the secondary market, with rough trading subdued and resale prices often below De Beers’ list prices. As a result, market participants are speculating that De Beers might need to reduce its rough diamond prices in the near future to stimulate demand, potentially at the sights scheduled for November or December.
In this context, De Beers’ selection criteria for future sightholders will consider not only traditional business performance metrics but also buying patterns during the current downturn. This may place pressure on sightholders to meet their purchasing allocations even in challenging market conditions.
New Strategic Collaborations on the Horizon
De Beers’ letter outlined plans to establish closer relationships with selected sightholders, expanding beyond traditional rough supply arrangements. The company is considering collaborations across different distribution channels and initiatives related to polishing, in line with its ‘Origins’ strategy, which involves working with third parties to produce higher-quality polished diamonds.
Botswana Agreement and Anglo American Sale
The announcement comes amid ongoing negotiations for a new marketing agreement and mining licence with the Botswana government. These discussions have faced delays, with the upcoming Botswana elections on 30 October potentially affecting progress. Meanwhile, Anglo American’s consideration of selling its diamond division adds another layer of complexity, as inventory levels and valuations are likely under investor scrutiny, particularly if rough diamond prices are adjusted.
