Okavango Diamond Company is testing a new way of selling rough diamonds by term contracts next year. The new initiative is aimed to provide customers with consistent supply during a period.
Okavango managing director Toby Frears told Rapaport News: “In response to requests for committed supply arrangements, we will be piloting the sale of term contracts by auction in February. The introduction of term auctions will complement our regular spot auctions and create new opportunities for customers who are seeking consistent and predictable supply over several cycles.”
Customers will be able to bid for committed supply over a three-cycle sales period, he explained. That will give them the ability to plan their production for approximately three months as they’ll be guaranteed the supply over the period for the goods they won. Okavango will test the program on select parcels. It will also continue with its regular auctions.
Meanwhile, Okavango's sales jumped 80 percent to $546.5 million in 2016, while sales volume more than doubled to 3.442 million carats, Frears reported.
“It’s been a good year for the industry as a whole, with the mid-stream benefiting from improved margins and steady polished sales after the well documented challenges of 2015,” Frears added. “While we’re optimistic on the back of customer feedback that these conditions should prevail into the early part of 2017, much will depend on the production volumes and pricing strategies of the major producers.”