TAHERA CORPORATION (fka TAH.TO)

[dimonfind]

junior miner Tahera to buy or market all the diamonds from its Jericho mine in Canada.


Tiffany to take on De Beers
Posted Mon, 11 Oct 2004

http://business.iafrica.com/news/125046.htm


Tiffany, the high-end US jeweller, has gone head-to-head with De Beers, announcing last week that it had struck a deal with junior miner Tahera to buy or market all the diamonds from its Jericho mine in Canada.

The move pits Tiffany directly against De Beers, which dominates the global rough diamond market, and other significant players in the value chain such as Israeli Lev Leviev the world's largest polisher, who supplies more than 10 percent of total rough production. Together they maintain a degree of control over the global diamond mining, marketing, manufacturing and retail sales.

Analysts say although Tiffany's strategic move will not make it an immediate counterweight to De Beers, it does illustrate how De Beers'' long-time grip on the marketing of rough diamonds is slipping.

"In Canada, Tiffany is dealing with a first-world country. It only has to link up with two or three more juniors to become a serious challenge to De Beers, which operates in a more difficult environment in Africa," one source said.

But De Beers spokesperson Tom Tweedy welcomed the news yesterday, saying it was not unusual for De Beers'' customers to develop their own brands, or to source diamonds elsewhere. "This is to be encouraged, not discouraged," he said. "If Tiffany is sourcing from a mine, all well and good."

Tweedy said it was not unusual for retailers to have arrangements with mines. Large US retailer Harry Winston buy its diamonds from the Diavek mine in Canada. "De Beers is very comfortable with competition in the market."

He said that it would be wrong to conclude from Tiffany's latest deal that De Beers is in trouble. "The demise of De Beers has been predicted since Cecil Rhodes died in 1902, but the company has blossomed in recent years, with sales steaming ahead."

A Johannesburg-based analyst agreed that the link between Tiffany and Tahera would not threaten De Beers. "De Beers is big enough and established enough not to be threatened. The bottom line is that there is a shortage of rough diamonds, so there is not really an issue for De Beers in finding a market."

De Beers has its own plans to enter the US retail market, and the way forward was cleared in July when the company settled a decade-long legal battle with US antitrust authorities by agreeing to pay a fine. The first of the De Beers stores is to open on New York's plush Fifth Avenue, with a second to follow in Beverley Hills.

Under the deal with Tahera, Tiffany will use a significant part of the production for its own jewellery collections and market the balance on the open market. The Jericho mine is set to go into commercial production by 2006. "Tiffany has taken a wonderful opportunity by financing smaller mining companies that the big players wouldn't touch because they are too small," an industry source said.

If Tiffany's strategy succeeds, it will have access to both rough and polished diamonds.

Business Day