Thursday, Jul 20th

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Message from Ronnie Vanderlinden

Dear IDMA Members, Industry Colleagues and Friends,

Below you will read a news item that I have not seen distributed or picked up anywhere else by our industry media. It is, however, of high importance to our members, and causes great concern about the future of diamond manufacturing in countries such as South Africa, Botswana and Namibia.

The below news item reports that the mineral resources committee of South Africa's parliament has given its attention to the obligation of diamond exporters to make up to 10 percent of their rough diamonds available to the State Diamond Trader (SDT) so that in turn the SDT can supply these diamonds to historically disadvantaged individuals - and companies.

However, the committee concluded that the SDT in practice had sold less than three percent of the rough diamonds in its coffers for this purpose.

"The business model of the State Diamond Trader has the highest budget of all the  entities managed by the department. It has however, failed to make full use the legal entitlement  to sell up to 10% of South Africa's diamonds, to the targeted group (historically disadvantaged individuals). "It buys less than 3% of its 10% quota of diamond production and under the watch diamond beneficiation in the country has decreased, resulting in the loss of jobs." the report quoted the committee's findings.

Why is this the case? The article raises various questions, some of which our members, during our recent Special IDMA Presidents' Forum in Antwerp, also have tabled - and answered. We hope to be sharing some of the conclusions of our Antwerp meeting soonest.

First of all, we look forward to seeing a genuine explanation and frank rebuttal by the SDT to the Committee's conclusions. But as manufacturers, we can confidently 'guess' what some of the answers will be.

The requirement of miners/distributers/exporters to 'tithe' from their produced rough goods results in those same entities supplying the SDT with the lowest quality goods they can possibly sort out of their goods.

Consequently, while on the one hand the SDT is supplied with the required quantities of rough diamonds, the beneficiary diamond companies have little interest in these diamonds as they are of unfit qualities and prices.  The local companies cannot therefore not produce the overwhelming majority of the goods offered by the SDT profitably, let alone sell the resulting cut goods at a profit in the global market.

Therefore, while it is easy to hang the SDT out to dry, instead the government would do well to guarantee the SDT the authority and control of the types of goods that are 'tithed,' goods that can be produced at a profit and sold in the market at a profit. Ultimately, this could result in a stable, local diamond industry that can bring diamond cutters and polishers that have meanwhile left the local industry, as there is no work, back to the factories and stop the loss of skills that South Africa, Botswana and Namibia are currently facing.

In addition, the governments could further encourage the growth of their local diamond industry by creating conditions that would attract foreign investments, and make the business environment for foreign diamond companies an interesting and profitable long term opportunity. Food for thought!

The Las Vegas shows are coming around soon and I am sure many of us will have an opportunity to meet. But most importantly, we all hope that the shows will offer a clear and positive indication for the coming holiday sales season! We need to sell, sell and sell!

Ronnie VanderLinden, President IDMA

 

 

State Diamond Trader failing to promote local beneficiation

 

 

The performance of the State Diamond Trader, which was set up to promote the local beneficiation of diamonds‚ was not satisfactory‚ Parliament's mineral resources committee has concluded. Diamond exporters have to make up to 10% of their rough diamonds available to the State Diamond Trader so that it can supply to historically disadvantaged beneficiators. The finding was made in the committee's report on the annual 2017/18 performance plan of the Department of Mineral Resources and its entities. "The business model of the State Diamond Trader by the admission of its CEO‚ remains flawed and in need of urgent review‚" the report said."The State Diamond Trader has the highest budget of all the entities managed by the department. It has‚ however‚ failed to make full use its legal entitlement to sell up to 10% of South Africa’s diamonds‚ to the targeted group (historically disadvantaged individuals). "It buys less than 3% of its 10% quota of diamond production and under its watch diamond beneficiation in the country has decreased‚ resulting in the loss of hundreds of jobs."

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