In the earliest phase of mine development, geologists and engineers are the driving force behind getting diamonds out of the ground and out to the professionals who ultimately sell the rough. Last week, we looked at the skilled people within a diamond sorting operation. Once diamonds are sorted, classified, and prepared for sale, they must, of course, be sold to the companies that buy rough for manufacturing, trading, tool making, and in some cases for investments. Let’s take a look at the professions that facilitate this exchange.
Rough sales are arguably the lifeblood of our industry, and often set the direction for others in the pipeline. Salespeople are one of the most critical parts of any business, and are often among the highest-compensated employees. Most rough diamonds are sold through long-term, multi-year contracts between miners and their clients. Compared to salespeople in most traditional buyer/seller negotiations, these rough diamond buyers have less power within the relationship to demand better terms, conditions, or prices. But the salesperson must still walk a fine line between adding value to his client base, and being too aggressive in pushing his company’s goods.
In a long-term contract system, the job of the salespeople is to work with their clients to ensure that diamond parcels fit the contracted supply agreement that was pre-negotiated to fit the buyer’s long-term needs. They listen to feedback, and, in turn, communicate this information back to the sorting and quality control teams to make changes to the rough assortments as appropriate. They are expected to be on the frontlines of the market, understanding the needs of their clients, and the changes to manufacturing margins that have an impact on their prices going forward. Salespeople are also skilled diamond people. Many of them start their careers with a foundation in diamond sorting and evaluation, and they must understand diamonds in order to work with their clients. Most people in diamond sales are promoted from within an organization. Salespeople must be skilled negotiators, although they typically begin in an advantageous position.
In the last few years, tenders and auctions have quickly grown in popularity, as many small, single-asset companies have entered the market. Tenders and auctions have proven to be an effective sales platform for these companies, because they can outsource all of the sorting and sales functions, and focus strictly on mining. Specialist tender houses have grown recently, and with this growth have created job opportunities in a new field. Tender houses tend to offer services to several different mining companies, and they often outsource their own outsourced work.
For anyone who has ever been inside a tender house during a sale, it is a busy place with a flurry of activity, and many people doing many different things at once. Most tender houses have several viewing rooms that are filled with customers looking at diamond parcels. In order to make this as efficient as possible, “runners” are employed to keep things moving, and give clients an opportunity to see as many parcels as possible within a limited amount of time. Just like the name implies, these runners transport diamonds between client viewing rooms and the main stock control area. In many cases, they are actually running during peak times with high traffic. Runners are also found during the sales weeks of long-term contract companies, although the atmosphere is usually a little more relaxed.
In a long-term contract system, the salesperson is typically a skilled diamond valuator. This skill is equally important in a tender system, as the tender house must be able to provide their clients with accurate estimates of the expected diamond value that they will sell. This task falls to diamond valuators, who often work with diamond sorters and quality control staff to put a price on each rough diamond parcel that will be sold. Developing proficiency in valuing rough diamonds can take decades, and like their salesperson counterparts in a sight system, these professionals often have extensive training in diamond sorting and quality control.
A small but declining portion of the world’s diamond production comes from artisanal diggers and other small-scale mining operations. This method of selling diamonds often involves a large number of people, who each provide different levels of service and function within a larger network. There are multiple levels of middle-men or wholesalers, who provide different amounts of liquidity on the ground in order to bring large quantities of goods to international markets. Like wholesalers in many industries, the buyer of diamonds must be prepared to purchase diamonds for immediate full payment without complete assurance that they will be able to recover that money quickly, or for a profit. Similarly, the diamond industry has a foundation of diamond traders who perform a similar function. They often buy goods where they see value and opportunity, and provide needed liquidity in the market too.
Like any other business, rough diamond sales require a myriad of back and front office support people. Diamond stock control, security, finance, operations, IT, and administration are some of the pivotal functions that require expertise and professionalism. If any one of these functions is missing or lacks technical competence, the whole process can stall and fall apart. The rough industry employs countless people in support of the task of selling rough for manufacturing. We will look at jobs in diamond manufacturing next week.
The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a professional qualified adviser.
Diamond industrialist Ehud Arye Laniado is a man passionate about diamonds. From his early 20s in Africa and later in Belgium honing his expertise in forecasting the value of polished diamonds by examining rough diamonds by hand, till today four decades later, as chairman of his international diamond businesses spanning mining, exploration, rough and polished diamond valuation, trading, manufacturing, retail and consultancy services, Laniado has mastered both the miniscule details of evaluating and pricing individual rough diamonds and the entire structure of the diamond industry. Today, his global operations are at the forefront of the industry, recognised in diamond capitals from Mumbai to Tel Aviv and Hong Kong to New York.
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