Africa is the largest diamond-producing region in the world, as it accounted for 51% of rough output by volume and 66% by value in 2022, according to the Kimberley Process data.
The continent’s leading diamond producers are Botswana, the Democratic Republic of the Congo, South Africa, Angola, Zimbabwe, Namibia, Lesotho, Sierra Leone and Tanzania.
Russia and Canada are the only non-African countries that made it to the top 11 diamond producers in 2022.
Despite dominating the production of natural diamonds, Africa is yet to become a serious player when it comes to adding value to its stones.
While India has not been a major diamond producer since the 1900s, Surat is the leading centre for cutting and polishing natural diamonds worldwide.
It exported diamonds worth $25.9 billion in 2022.
The country is a preferred destination for diamond manufacturing as it costs $10 to cut and polish diamonds per carat.
This is not the case in Africa, where one needs to fork out more than $50 to cut and polish diamonds per carat.
The African Diamond Manufacturers Association (ADMA) president António Oliveira told Rough&Polished’s Mathew Nyaungwa in an exclusive interview that the lack of a robust infrastructure in Africa fails to accelerate and encourage manufacturing.
He said unjustifiable fees, and intolerable bureaucratic blockage to process official documents for companies and individuals, combined with a lack of transparency, also contribute to excessive labour costs.
Oliveira also cited distractions from civil war, exploitation of resources, rampant corruption, and nationwide instability on the African continent as factors contributing to the industry’s misfortune.
Below are excerpts from the interview.
What is the principal role of the African Diamond Manufacturers Association (ADMA)?
The African Diamond Manufacturers Association (ADMA) is an intergovernmental organisation that seeks to represent the interests of national diamond manufacturing associations on the African continent. ADMA's advocacy focuses primarily on preserving the rights of diamond manufacturers, business-to-business (B2B), business-to-consumer (B2C), and singulars operating within the African continent. ADMA aims to strengthen, enhance, and provide sustenance for the diamond supply chain, while also working to promote and safeguard the credibility of diamond products and consumers.
What is the makeup of ADMA’s membership?
ADMA is in charge of a stringent screening and approval process for potential members, and membership is primarily composed of diamond manufacturing companies looking to or currently operating on the African continent. Our membership incentive programme has exhibited great success in encouraging the establishment and unification of supporting associations within African nations that produce diamonds. ADMA works closely with commanding industry organisations like the African Diamond Council (ADC) and the African International Diamond Exchange (AIDEX) by supporting their industry activities through each organisational substructure. ADMA subscribers possess the benefit of access to sensitive member-only, industry content and benefit from the afforded professional perspectives that are designed to advance their global position, authority, and credibility.
What is the state of diamond manufacturing throughout Africa?
Diamond manufacturing typically takes place in Surat (India), Antwerp (Belgium), Tel Aviv (Israel), Shenzhen (China), New York (USA), and Dubai (United Arab Emirates). Looking back at the last decade, it was uncommon to witness African countries processing their diamonds or moving in a direction that added value to the raw material. Recently, positive exponential growth in the established set of attitudes regarding the local transformation of natural rough diamonds has been observed. Adoption of this particular mindset helps to encourage the African public sector and leaders in diamond mining areas to cultivate strategies that encourage and secure investment in lapidary activities for diamonds and gemstones. Cutting and polishing factories assist in leveraging the producing country's economic growth and consequently highlight the capacity of the African continent in efforts to transform its raw products without external dependencies. Today, Africa has 28% more lapidary factories than it did 10 years ago, and ADMA is actively working to assist diamond manufacturers with turning an actual profit, while also advising African governments in their efforts to build a more than viable industry.
What are some of the challenges facing diamond manufacturers in Africa?
The greatest challenge facing diamond manufacturers in Africa is the implementation of advanced technology. Since the profit margins in the diamond cutting and polishing industry typically range from 15% to 30%, these parameters tend to be influenced by several key factors, such as the market price of the rough material, the efficiency of the cutting and polishing process, the skillset of the labourers, and the marketability of the finished or polished diamonds. Modern diamond manufacturing facilities are gradually adopting automated laser cutting systems, which are designed to reduce human error and prevent the wastage of natural resource residue. Accurate sorting and grading of diamonds is crucial in determining the product's quality and value, so manufacturers are in dire need of detailed digital models of diamonds that position and allow them to visualise a variety of cutting options and assess the potential value of each stone before attempting to cut or cleave. As a result of these manufacturing challenges, ADMA does not hesitate to step to the forefront of advocating the use of automated sorting machines, which are equipped with advanced imaging technology that swiftly and precisely analyses various aspects of a diamond, including colour, cut, and clarity. Through ADMA's assertive advocacy efforts, governments within African diamond-producing nations have been making significant strides in the establishment and consolidation of their domestic diamond manufacturing sector. At this present time, several African mineral and natural resource ministries are beginning to seriously consider the pressing implementation of blockchain platforms to track each diamond's journey, which places a strong emphasis on provenance. Other nations, such as Zimbabwe, Sierra Leone, the Democratic Republic of the Congo, and the Central African Republic, are looking to create more defined incentives that successfully attract business to the sector, which results in securing new investment and additional transparency. There is still a great need for governments and private sector diamond manufacturers to cooperate with and support local communities in efforts to create profitable mechanisms that facilitate the importation of manual and technological equipment for cutting and polishing factories. This joint effort would result in upgraded tax policies domestically, especially when it comes to selecting the most equitable technological registry to facilitate the universal tracking of African diamonds anywhere in the world.
How are African governments supporting diamond manufacturing in their countries?
In Botswana, Namibia and South Africa, for example, the public sector has become increasingly open to discussing and exchanging constructive ideas that would encourage industrialisation of the continent's manufacturing sector as an irrefutable reality. To further enhance the African diamond industry ecosystem, governments in producing nations such as Angola, Zimbabwe, Lesotho and the Democratic Republic of Congo are becoming more inclined to follow our lead. Undeveloped countries in the sector have become much more receptive to devising infrastructure investment strategies that enable and facilitate the insertion of new players into the local market. ADMA commits to advising African governments in efforts to provide additional support in our organization’s strategy and we shall continue our commitment to enlighten key industry stakeholders through regular seminars, forums and activities aimed at adding value to the entire African diamond industry.
Why is it expensive to manufacture diamonds in Africa?
To highlight the expenditures of diamond transformation within the bounds of Africa, we must carefully examine a set of relevant points and circumstances that have often hindered progress within our industry for many years. The average cost for cutting and polishing a natural rough diamond is approximately $10 per carat in India, where there are more than 5,000 cutting and polishing factories. This provides evidence of why Surat is the ideal destination for cutting and polishing natural, gem-quality diamonds originating from Russia and Africa. This is also why India has an edge over China as the preferred destination for cutting and polishing of both, natural and synthetic or lab-grown diamonds (LGDs). In China, the price increases to $17 per carat, where the industry employs an estimated 60,000 workers to cut and polish a large portion of synthetic or LGDs. Some of the larger-sized and more valuable special diamonds are cut and polished in both, Tel Aviv’s Ramat Gan district and in the European diamond capital of Antwerp, where there are more than 350 workshops to support the industry in Belgium. Cutting and polishing natural rough diamonds on the African continent pushes the price per carat over $50. Historically, there have been distractions of civil war, exploitation of resources, rampant corruption and nationwide instability on the African continent that contribute to all varying circumstances of price increases as well as to circumstances directly related to the industry's misfortune. The lack of robust infrastructure in Africa fails to accelerate and encourage a more viable ambience for investment in exploration and is the principal reason why manufacturing costs are excessive in many of Africa's producing nations. In addition, unjustifiable fees, and intolerable bureaucratic blockage to process official documents for companies and individuals are combined with a lack of transparency that also contributes to excessive labour costs. We do not wish to compete with India in a skilled area that is just as important to them as mining is for us here in Africa.
What is the level of demand for diamond jewellery in Africa?
The demand for luxury goods and diamond jewellery in Africa is gradually on the rise and is expected to expand annually by 1.32% in the next 4 years. If the African diamond industry’s objective is to exceed the level of success that well-established diamond jewellery brands enjoy, then long-term strategies must be devised by those looking to increase Africa's visibility. Preconceived global campaigns must be aggressively advanced and promoted by Africans through a variety of home-grown trajectories that include African First Ladies, Africans employed by global media platforms as well as by African supermodels, filmmakers, influencers and storytellers. No matter where you go, Africans possessing the means, do not go unnoticed when displaying excellent taste in their diamond jewellery options. Consumption of diamond products and jewellery that is 100% manufactured or processed in African countries has become more of a movement that others can join, rather than a trend to momentarily embrace. A few years back, it was unlikely to witness high-end jewellery brands produced on the African continent, given that there was a deep-rooted scarcity of material resources. Before African consumers gravitate in support of their brands, they tend to opt for Western luxury brands that are aggressively and globally marketed. With the exponential development of the African economy, political autonomy and vitally important psychological evolution, our governments and entrepreneurs are beginning to work on possibilities of resolution that have now become the pride of the continent. Today, global consumers and collectors can now have access to African creations and designers of high-end diamond jewellery, which is rapidly gaining momentum.
What is the impact of lab-grown diamonds on the natural diamond industry?
To some extent, the rise of synthetic or lab-grown diamonds (LGD) has minimally impacted the natural diamond sector by creating an illusion of value comparable to natural diamonds. At this stage, it is safe for me to convey that LGDs have been defined as a trend that fails to pose any bona fide or short-term threat to natural diamonds, which are high-value products. This trend undermines substantial job creation and economic contributions that the natural diamond industry delivers to the gross domestic product (GDP). LGDs have been accepted and established as a cheap alternative for those who have become more obsessed with vanity, rather than value. With LGD prices continuing to plummet, diamond consumers are awakening to losses on their shortsighted investment. There is a misconception that lab-grown diamonds are more eco-friendly, which is another challenge consumers are currently faced with and these diamonds do not always reflect the complete environmental impact of LGD production. Moreover, lab-grown diamonds lack the stringent regulations that govern natural rough diamonds, leading to a less controlled market. ADMA believes that natural diamonds will never have to face any real competition from synthetics. Like every industry, there are anticipated trials and obstacles in the market and with the onset of unexpected geopolitical changes, there is an absence of foresight, insight and hindsight at the highest levels.
What is the importance of advancing traceability efforts in the African diamond industry?
For many years we have had an unstable market, which has somehow affected the confidence of the end consumer, so ADMA's efforts to advance traceability in the African diamond industry are paramount for several reasons. Firstly, it helps introduce consumers to the origins and cultural significance of diamonds, fostering a deeper appreciation for these gems. Secondly, African governments must enforce stricter regulations on lab-grown diamonds to maintain market integrity. Enhanced traceability of natural rough diamonds will clearly distinguish them from lab-grown alternatives, ensuring consumers can make informed choices and preserve the value of natural diamonds. For the first time in the history of the African diamond industry, traceability, just like transparency and provenance is proving to be the top priority. The demand for Certificates of Origin (CoO) and Titles of Ownership (ToO) is what will adequately deliver the much-needed value proposition that African diamond mines have been devoid of. In efforts to help African diamond-producing nations understand how our industry can benefit from blockchain technologies, Wellington Mpandi, ADMA's Vice-President and traceability authority has worked relentlessly over the last 3 years to shed light on many of the blockchains that are currently in existence. Out of the ones that are currently on offer, we have concluded that there is a public traceability solution and platform that many of the private blockchains are hoping to duplicate or infringe upon. Since the private blockchains that are currently on offer have not been fully outfitted with the supporting tools to successfully bring the product to the forefront under the nose of the consumer, the chances of them being rejected in African diamond-producing countries are to be expected. The truth of the matter is that the proposed Titles of Ownership (ToO), by being leveraged to the consumer, solely for natural diamonds will effectively create and have a vacuum effect in the direction of legitimate traceability, especially if we are wise enough to disturb the infiltration of lab-grown material. The African Diamond Council (ADC), for example, has often suggested that the nano component, can and should be applied to both, natural and lab-grown diamonds. There is an option to nano-tag, both above and below the surface. This move would certainly assist consumers and jewellers in identifying man-made diamonds, however, the current costs of nano-marking the diamonds are the very reason it has not been widely implemented, given that this process has everything to do with costs. Not only would consumers like to know, but they deserve to be conscious of what exactly is and is not a natural product. The implementation of effective traceability within the diamond market brings numerous advantages, particularly in Africa and successful implementation allows the entire value chain to make transactions more manageable, having a greater sense of the diamond journey, which will certainly increase the confidence of the end consumer.
Will you engage other platforms apart from Authentia?
At this point, ADMA does not need to engage with other platforms apart from Authentia, given that a decision has been made to utilize the platform. ADMA has taken drastic measures to thoroughly examine and assess the quality of blockchain technologies, particularly those hoping to be applied to the global diamond industry. Africa’s concentrated interest in traceability began back in 2014 with the emergence of Everledger. At that particular time, the industry inaudibly watched the De Beers Group attach itself to Everledger’s bid to provide a blockchain solution, only to walk away the following year on a mission to develop Tracr, a glorified diamond sourcing and traceability replica that, at some point, may have an opportunity to reach their long-term goals if they enlist in a collective of blockchain companies that have yet to realize that their technologies are ideally compatible to effectively function on Authentia groundbreaking traceability platform. The same holds for each of the technology firms that presented in Dubai last month during the Traceability Forum during the Kimberley Process Intersessional Meeting. Authentia provides a comprehensive set of tools that cater to various facets of the African diamond industry. Being designed by and for diamond professionals, it uniquely aligns with and addresses the needs of our typically neglected sector. Moreover, with its focus on African diamonds, Authentia plays a crucial role in effectively marketing and introducing these diamonds from the source to the global consumer market. ADMA seeks industry partners that offer real advantages for the entire diamond value chain, therefore, ADMA is open to bringing the Kimberley Process (KP), major diamond centres and other promising technologies to Authentia's table before the KP Plenary in November.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
