In the face of a recent shortage of rough diamonds and growing competition from Chinese manufacturers, approximately 1,500 small, medium and large diamond merchants have decided to come together to form a company to source raw diamonds.
The company, Surat Diamond Sourcing (India) Ltd. (SDSL), will directly source rough diamonds from mining companies all over the world. It will sell to its equal shareholding members through a tender system.
The country of India already polished approximately nine out of every ten diamonds, most of which weight under one carat. Surat alone, already a major diamond manufacturing center, sees about 60-70% of the rough diamonds in the world come through the city.
SDSL already has plans to set up liaison offices in major diamond producing countries such as Australia, Canada, South Africa, Namibia, Tanzania and Zimbabwe in an effort to smooth the progress of direct rough diamond souring.
In fact, Zimbabwe is high on the companies list. According to Ashit Mehta, founding member of SDSL and chairman of Blue Star, a top diamond company, SDSL wants “... to begin our operations with the direct sourcing of rough diamonds and from Zimbabwe. The Zimbabwe government has a stockpile of $2 billion worth of rough diamonds and we want to purchase it all.”
The new rough diamond sourcing company is scheduled to be formed under the Companies Act by the end of September and will begin with an initial capital of Rs 1,000 crore. According to reports, the SDSL will be free to sell
diamonds to any company in the world; however members registered in India, specifically in Surat, will have first preference.
Membership fees for large diamond manufacturers and rough diamond dealers are estimated at Rs 1.08 crore each, while over 1,000 small and medium diamond manufacturers are expected to contribute Rs 54 lakh each.
“SDSL intends to compete with other players by becoming a sightholder or client of big mining companies like De Beers, Alrosa, Rio Tinto and BPH Billiton. With a strength like this, we can buy any amount of rough put up for sale,” said managing director of K Girdharlal, Parag Shah.
