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Dev Jewels’ Devendra Bhandari: It’s not feasible to set up diamond-cutting and polishing factories in Africa

04 march 2024

Bhandari_big.jpgDiamond-producing countries in Africa have been on an ambitious drive to add value to their rough diamonds in a bid to derive more revenue.

For example, the Botswana government had been asking sightholders to establish local factories if they wanted to buy rough stones in the country.

It is, however, not feasible to cut and polish diamonds in Africa compared to jurisdictions such as India, according to Dev Jewels’ managing director, Devendra Bhandari.

He told Rough&Polished’s Mathew Nyaungwa in an exclusive interview that at least 80% of factories in Botswana want to close shop due to high operational costs.

Africa, he said, further lacks critical skills in diamond manufacturing.

Meanwhile, Bhandari said there is a need for Namibia’s state-owned diamond trading company, Namib Desert Diamonds (Namdia), to be consistent with its rough diamond supply to buyers.

He said that while Namibia’s diamonds are of high quality, they are currently considered too expensive.

Below are excerpts from the interview.

 

What is your group’s primary objective?

We buy diamonds and in Namibia, we are currently a client of Namdia, we are looking to buy more diamonds as we are manufacturers. We are trying to provide a whole story to our end users that these diamonds are coming from Namibia and that there is a story behind each diamond.

Apart from Namibia where else do you source rough diamonds?

We also source from Botswana, South Africa, Lesotho, DRC, Angola, Tanzania, and Canada. We used to buy from Russia but not anymore as well as Australia but now they no longer have any diamonds. We sometimes buy from Sierra Leone.

How often do you source diamonds from small-scale miners?

We try to work with miners themselves, so obviously officially licenced companies that do not trouble any government. The right way of doing business is doing it the right way. In artisanal we work with miners in DRC because it is legal to do artisanal mining there. So, what we are looking to do now is fund artisanal miners to build an operation right there [in DRC) working with the government and finding the right way.

Have you come up with a funding model for the artisanal miners?

Generally, what we do is look at the offtake agreement, we fund the production process and the production comes to us and then we are the offtakers.

Do you consider quality when you source diamonds from artisanal miners?

Quality doesn’t matter because we can use any quality as we also use industrial diamonds. So low quality is not a problem. Diamonds are of different colours, clarity, and grades et cetera.

So, it doesn’t matter what quality comes out, it’s a matter of price and supporting the miners.

How serious are you when it comes to the issue of provenance and the sourcing of ethically-mined diamonds?

ESG is very important these days because we are a vertically integrated company if you are putting any diamond or gemstone into a jewellery it has to be sustainably sourced. We don’t want to use what they call blood diamonds. We make sure that everything that we buy is ethically sourced or mined and that they are following the environmental assessments, rules and regulations.

Do you also have plans to finance medium-scale mining operations?

We are willing to finance but the biggest expense is the exploration part and that’s not what we are looking for at the moment. We are either looking for companies that are just planning or going into production or are already into production and require the financing to continue with production.

You said at the moment you are not interested in funding exploration activities.

Yes, interest is always there. I know if the opportunity arises in certain countries we will not say no!

Do you have any plans to set up cutting and polishing factories in Africa?

In Botswana, the government said if you want to be a sightholder here you need to set up a local factory but if you go and ask maybe 80% of those factories they all want to go back simply because it is expensive and you also do not have the artists to manufacture the best piece of diamond in Africa. It’s a human skill and it is very difficult to transfer. You can transfer an automated skill, which is easy but diamonds are not machine-based, it's human labour. So even if you look at Namibia you will not find so many manufacturers because there are not so many diamonds and another big drawback is that one of the biggest buying countries, India, has a large import duty for polished diamonds so how do you manage to…already your expenses are so high and you will have to add more expenses. It is more beneficial for governments to find a different way of asking people to support the country.

You are also interested in synthetic diamonds, what are your activities?

We are not part of growing synthetic diamonds for gem purposes. For industrial purposes, we have been in the industrial diamond industry for the past 30 years and synthetic has been there for the past 40 years. So, in industrial, it's already there, fully used, and we supply that because it's an industrial purpose. When it comes to natural diamonds yes there is a limited number of people that can afford the diamonds and we stick to that. Lab-grown diamonds are synthetic as you mentioned, they are there and are not going anywhere soon but we are not into it. We only know how the system works and yes if people ask for it we are not going to say no. If people need a synthetic ring as a jeweller you have to supply it.

Are you pleased with the current rough diamond prices?

As for Namdia in Namibia, the prices were good up until they became high to a certain extent that they didn’t follow the market.

Which period was this?

This is the whole of one and a half to two years. After COVID-19. What happens here is that we want the companies to follow the market trends. We need them to listen to the people who are buying, who are your clients. If information is not communicated correctly then you have a misalignment of prices, which makes the pricing difficult. Currently, Namibian diamonds are considered the most expensive diamonds unfortunately but there is a future in it if they rectify the pricing.

What are some of the challenges you face buying diamonds in places like Namibia?

It is very difficult to plan something when you don’t have the consistency. If you don’t get the Namibian diamonds regularly, how do you put up the props? How do you invest in the market? That is one place we are struggling. What is important for a country like Namibia to grow is the political stability, which they have. The second thing is consistency and that depends on any kind of supply. Find consistency in your supplies of rough diamonds.

How often do they conduct their sales?

Namdia is the same as the Diamond Trading Company so they do 10 sights. We visit Namibia whenever there is a sale. However, in the past few months, they didn’t have a sale.

Did they explain why the sales were shelved?

We did not receive any explanation.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished