Mumbai: De Beers India, the Indian arm of the South Africa-based diamond exploration and mining company, is restructuring its local operations and has retrenched around 90% of the employees at its Bangalore testing centre, even as its market share in the rough diamond business continues to fall and it presses ahead with its exploration activities in the country.
A senior official at De Beers confirmed that the company has issued pink slips to 70 out of the 80 people working at the testing department. Of the 10 others, six are being relocated to South Africa. “The retrenchment is part of a restructuring programme. Six geologists are being relocated,” said the official who did not wish to be identified.
The testing centre tests rough diamond samples.
In an email response to Mint’s queries, a spokesperson for De Beers did not comment on the retrenchment, but said that the company was relocating “some of its geologists” so that they could “gain further international experience”. “Those that are remaining will form technical … teams focusing on our primary objective of discovering a world class mine,” the spokespersonadded.
De Beers had a near monopoly with about 90% market share of Indian rough diamond business. The share came down to 60% three years back and to around 42% last year, according to one of the biggest polished diamond exporters based in Surat, Gujarat. The exporter did not wish to be identified.
“De Beers played a pivotal role in growth of diamond industry globally. We exported hardly Rs60 crore worth of diamonds in 1960. Last year, the exports were over Rs80,000 crore. De Beers with its marketing blitzkrieg and business acumen helped grow the industry into such mammoth size,” said Pravin Nanavaty, a leading diamond trader based in Surat and president of South Gujarat Chamber of Commerce and Industry.
However, over the years new players have entered the market and are edging De Beers out of rough diamond business.
“De Beers’ market share is likely to go down further as the firm has lost its control over many mines globally and contracts with most of the wholesale traders are going to end by this year,” added Nanavaty.
De Beers had started negotiations with the Indian government in 1994 to begin exploration activities in India.The company claims to have made around 38 kimberlite discoveries while prospecting in Karnataka, Madhya Pradesh, Orissa and Uttar Pradesh, but says it is “too early to determine their economic significance”.
“Kimberlites are volcanic pipes that contain diamond-bearing rock brought close to the earth’s surface through volcanic eruptions millions of years ago,” says De Beers’ India Review for 2007.
According to the company, very few kimberlite discoveries turn into mines and an extensive evaluation process is required before the viability of mines can be assessed. De Beers’ mining applications are pending in the states of Chhattisgarh, Jharkhand, Maharashtra and Tamil Nadu.
“(Exploration) activities are ongoing in several states and results are encouraging. So far, we have spent Rs100 crore in exploration,” the spokesperson said.
“They are spending themaximum among all players in the business and the probability of their success is highest,” said Aagam Sanghvi, director of Surat-based Sanghvi Diamonds, a wholesale diamond trader.