Goodbye London, hello Gaborone: De Beers sales head to Africa
By Clara Ferreira-Marques
LONDON (Reuters) - In a spartan office in the London headquarters of De Beers, Elliot Tannenbaum holds a cloudless stone the size and shape of a domino to the light: a rough diamond worth millions, even before it is cut and polished.
A veteran diamantaire, Tannenbaum's family firm is one of some 80 buyers handpicked by the diamond giant to buy rough gems from its mines, under an arcane system of pre-determined allocations and regular sales meetings known as "sights".
"I have been coming here some ten times a year for 35 years, I have missed only two or three sights. It is part of our routine," says Tannenbaum, whose Leo Schachter group, founded in New York and now headquartered in Israel, is a major manufacturer of polished diamonds.
But this week's sight is De Beers' last in London. From now on, the action will be in Gaborone, dusty capital of Botswana.
The office allocated to Tannenbaum's firm, his dedicated De Beers contacts and the black-and-yellow attache case stacked with clear plastic bags of diamonds will move south along with the whole of the company's sales operation - 85 out of 300 London-based De Beers employees.
The 2011 decision to move - which will cost more than $120 million, including shiny new offices in Gaborone - follows years of negotiations between Anglo-American-owned De Beers and Botswana, the largest producer of gem diamonds and home to mines like Jwaneng, the world's richest.
The move secured a new 10-year contract for the sorting, valuing and sales of diamonds from the Botswana mines run by Debswana, a 50:50 joint venture between De Beers and the southern African country's government - the longest sales contract agreed to date between the two sides.
It will shift more than $6 billion of annual rough diamond sales from an international financial center to a comparative backwater with a population of 230,000, in one of the most dramatic examples of a producing country battling successfully to keep value and profits from the raw materials at home. Continued...