What is Direct Rough Diamond Sourcing and How does it impact the end customer?

 

Sorting 

Planning

Cleaving 

Bruting 

Polishing 

 

The mode of sourcing also impacts the final price at which diamonds are offered to a customer. 

 

Manufacturers have three main concerns when sourcing rough diamonds: 

 

Consistent supply of rough diamonds 

Price 

Quality of rough diamonds 

Ethically mined diamonds 

 

Direct purchase from mining companies

 

The best diamond manufacturers prefer buying directly from mining companies and this is quite a common way of purchasing rough diamonds. Mining companies can sell their diamonds through either one of these; 

 

Sight-holder system 

Tenders/Auctions 

 

Sight-holder System

 

Sight-holder system is the most reliable and safe option to purchase rough diamonds from the world’s major mining companies such as De Beers, Rio Tinto, Alrosa, Dominion Diamond, and many more.

 

These mining companies organize exclusive events/sales sessions/sights by invitation only, where the diamond manufacturers can purchase rough diamonds.

 

Tenders and Auctions 

 

In recent years, many smaller mining companies that own only a few mines have emerged in the market. 

 

Having only a few mines lowers the chances of being able to have a consistent supply of homogeneous diamonds. This is where tenders and auctions come in. 

 

Diamond buyers are invited to view the diamonds for sale and evaluate what they believe to be the appropriate price for each parcel of diamond. 

 

In contrast to the sight-holder system, where the price of each assortment is predetermined, in the tender process, manufacturers bid for the individual parcels.

 

In the tender process, manufacturers have an opportunity to see a diamond, scan it on a mobile system, conduct initial planning to estimate its value, and then make a bid for the diamond.

 

Just a side note that big companies also host auctions for their rare and larger diamonds. 

 

Then auctions are similar to tenders except for the bidding process, which is more sophisticated in the auctions.