As one of the two largest diamond mining companies in the world – the other being Russia’s Alrosa – De Beers has a lot of leverage over the financial arrangements it enters into with its customers. As it determines the contractual terms with its clients, it also gives them names; its customers are called “Sightholders” and the agreement between them is called “Supplier of Choice”.
Originally, the intention of the SOC system was to open up the field to any diamond company of stature; previously, the Diamond Trading Company was considered to be a closed club. In the pre-SOC era, applicants had to write essays in order to be accepted as a Sightholder.
In 2007, De Beers launched its Supplier Of Choice 2 policy, a modification of the SOC terms. Under the new program, there are one-year extensions of intentions to offer (ITO’s), estimating Sightholder allocations. Also, the application process was simplified and the selections were personalized, re-inserting the human element into the decision-making process.
Today there are about 85 Sightholders bound by these conditions. There is now talk of revamping the SOC agreements for the third time.
