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Product responsibility

Review

Petra monitors and manages each step in the diamond production process to the highest ethical standards: from exploration, mining and processing, through to sorting, marketing and sales. Petra will only operate in countries which are members of the Kimberley Process and every diamond produced by Petra is certified as conflict-free.

Marketing

Petra’s South African production is sold at the Johannesburg Bourse according to the following process:

  • each individual mine’s production is pooled on a weekly basis;
  • the diamonds are cleaned and placed into international sales assortments according to a number of criteria such as size, colour, clarity and expected value (for example, certain high value stones are sold as single lots);
  • individual mine production is kept separate, providing buyers with an additional level of knowledge about the goods they are purchasing based upon each mine’s unique diamond characteristics;
  • the goods are viewed by the State Diamond Trader (“SDT”), who has the right to buy up to 10% of Petra’s production, according to South African legislation;
  • Petra values the goods internally and then agrees a market price with the Government Diamond Valuator, who is responsible for the verification in pricing of the productions;
  • the tender previews then begin, with Petra’s premier clients (who generally purchase around 90% of the goods at each tender) invited to view the assortments over a three- to five-day period;
  • the tender starts and lasts between four to six working days, during which participants view the assortments and place a confidential electronic bid on the parcel of their choice; and
  • at the end of the tender, the results are published and the highest bidder wins the parcel.

As far as Petra’s marketing strategy is concerned, local and international clients receive monthly notifications regarding tenders. Selected clients are able to preview the goods available for tender at the Company’s offices.

Petra’s Tanzanian production is sold in Antwerp, which remains one of the world’s key diamond centres. The diamonds are sorted and sold through open tenders in a similar fashion to the process outlined above. However, there is currently only limited alluvial production from the Williamson mine, which should significantly increase when production from the rebuilt plant starts in FY 2012.

As the Company’s output has grown, Petra’s tenders have attracted an increasing number of significant buyers. Many of the world’s foremost manufacturers and dealers are now regular Petra clients and interest continues to increase as production levels grow.

There are no health and safety impacts relating to the Company’s marketing and sales processes.

The Company did not incur any fines for non-compliance with applicable laws and regulations concerning the provision and use of products and services during the year under review.

Sales process

In South Africa, the sales process is facilitated by the Diamond Export and Exchange Centre (“DEEC”), with Petra’s involvement only beginning on closure of the tender. Clients are required to bid on the DEEC bidding system before the tender closes, with each client being issued an access code. Upon the closure of the tender, the system accepts all bids that meet or exceed the Petra reserve price. A below reserve report is generated to show the lots that have not met the reserve price and it is at management’s discretion to accept or reject the highest offer below the reserve, or to withdraw the parcel and retain it for sale at a future date. In certain circumstances, Petra can export unsold diamonds to its marketing office in Antwerp for sale.

On completion of the sales process, successful clients are invoiced for the parcels they have won. Clients have a period of 48 hours after receipt of the invoice in which to pay. When the payment is received, the parcels are released to clients.

Customer Satisfaction

Petra receives feedback from clients regarding production, assortments, market movements and pricing. Any feedback regarding production is noted and considered for the next production cycle. Petra has an open door policy with clients if they have any queries or concerns, and the Company always assists as far as possible.

Customer Privacy

Confidentiality is of the utmost importance to Petra. When previewing production, each client is allocated a private viewing room and invoices are issued directly to the clients. No tender information is divulged about results or top buyers and other related matters

The Diamond Industry

The diamond industry is divided into two distinct categories: the trade in gem-quality diamonds, and the trade in industrial diamonds.

The use of diamonds in jewellery is an ancient practice and is a result of diamonds’ unique hardness and high dispersion of light. Carat, cut, colour and clarity (the four Cs) dictate the grading and certifying of diamonds and their corresponding value. Those diamonds of insufficient quality for use as gemstones are used in a variety of industrial applications. These applications have historically been associated with the hardness and thermal conductivity of diamonds, and they are therefore ideal for use in cutting and grinding tools.

The invention in the 1950s of synthetic diamonds has rendered the use of real diamonds in industrial applications almost redundant. Today, approximately 90% of diamond grinding grit is of synthetic origin.

GRI

The following GRI indicators are covered in this section:

Product Responsibility
Management approach
Marketing and Communications
PR6
Programmes of adherence to laws, standards and voluntary codes related to marketing communications, including advertising, promotion and sponsorship
PR9
Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services