Although it is challenging for previously disadvantaged individuals to enter the diamond industry due to the financial barriers, South Africa's State Diamond Trader is providing nascent entrepreneurs with exposure, market access, and other support.
This had been the experience of Kukame Diamonds and Projects founder and director Thataitsile Moremedi who exhibited at the country's inaugural diamond show in Cape Town last February.
In an exclusive interview, he told Rough & Polished's Mathew Nyaungwa that he became a client of the State Diamond Trader in 2021, which helped his company access rough diamonds.
He also partnered with an experienced industry player who introduced him to additional financial partners, allowing the business to grow.
Moremedi said his company is now focused on setting up a jewellery manufacturing facility.
He also intends to source rough diamonds beyond the State Diamond Trader targeting countries like Angola, Botswana, Namibia, and Lesotho.
Below are excerpts from the interview.
When did you set up Kukame Diamonds and Projects?
I registered Kukame Diamonds and Projects in 2017. I did the training for rough and polishing in 2019 and I got my license the same year. I was assisted by the Kimberley Diamonds and Jewellery Centre in registering my company. They incubated me. When we were done, I went to attend a course in Johannesburg, at the Diamond Education College. I then applied for a beneficiation license, which I got in 2019, around September. 2020 was a COVID year and there was no business. I only started full trade in late 2021 when I became a client of the State Diamond Trader. It was difficult to access rough from producers and anywhere [until] I became a client of the State Diamond Trader. I also managed to get a financially strong partner, who has been there in the market for a long time. The financier was willing to guide me through the processes. He introduced me to his other financial partners once I gained his trust.
What was your experience when you knocked on doors looking for funding to finance your business?
It was difficult because I tried all institutions like government institutions and even the banks. So there's no one who's interested in financing the diamond industry. Even to get funding for mine and so forth is very difficult. So, I continued knocking on doors. I went through the departments. The other support that I got was from … like, your non-financial support programmes such as branding material, and all that. When I got the financial support, I started with commission work.
How difficult is it for the previously disadvantaged people in South Africa to penetrate this industry?
It's very, very difficult. Because the industry is capital-intensive. It is very difficult to penetrate if you don't have financial backing. Because the producers are not willing to release the parcels, and so forth. I'm from a diamond area where the diamonds are found. It's a communal land. Because I can't mine, it's difficult for me to get stones from the miners there before they go to tender. At the tender house, we are not able to contest with the big players. So it's easier to negotiate the price of the parcel when it comes directly from the producer. So that at least then you know you can negotiate minus 20 or 30% where you know that you will get your profit margins.
What sort of assistance are you receiving from the State Diamond Trader?
The State Diamond Trader is giving us exposure, access to the international market, and interventions where it's needed. They are also giving us an opportunity to participate in shows like this one.
How did you feel when you were told that you had an opportunity to exhibit at this inaugural show? What has been your experience from day one?
When I was told that I was going to exhibit, the first thing that came to my mind was 'There's no way'. This is an opportunity to get relevant, the right network. Meeting players, key players, who are controlling the industry. I also had an opportunity to establish relations with other countries that are supplying rough diamonds. When supply drops in our country, then you know you don't have only one source of that.
Have you managed to secure or at least an agreement to buy rough from other suppliers, apart from the State Diamond Trader?
Yes, the Angolans, and we are waiting for an invitation from them, from Catoca to be able to go and register. I've also just met with the small-scale miners from Namibia. We agreed that I go over to Namibia for me to get an extra supply of rough.
I'm also looking at Botswana although I didn't meet anyone from that country. I'm looking to get rough from Lesotho.
Talk to me about the jewellery that you are exhibiting.
The jewellery that we are exhibiting here was jointly produced with the incubation.
Where are you exporting your jewellery?
Currently, I don't have 100 per cent control because of the partnership. So they have been doing most of the selling. They have been doing most of the selling in the international market.
Are you capable of standing on your own away from the incubation?
Yes, and they have also assisted me in terms of the negotiations in order for me to get a factory space.
When do you think you are going to set up your factory?
I think before June the factory will be up and running.
Where will you get funds to operate the factory?
I'm in the process of completing an application with the National Empowerment Fund. The 40% is a grant while 60% becomes a loan. So you take that loan with the NEF, the provincial government comes on and covers that part of the grant.
What would you tell young Africans who want to walk the path that you took?
You know what I would say to them is the concept or the mentality to say that where the diamond industry has money, you will make your profit overnight when you come into the diamond industry. They must get out of that thinking. Because you have to be patient. When anyone comes into the industry, you must be patient. You must be prepared to be very humble. You must be prepared to listen to the people who have been there in the industry, and who are trying to guide you.
Don't come in and say you're clever. You do things your way. But it's a different animal, the diamond industry. You need to get the right guidance. And be patient. And move at the right pace. And then at the ultimate end, you'll get where you get what you want. Take your time and patience. If you are patient enough, you know what you want in the industry, you will be able to achieve it.
What is the level of interest in diamond manufacturing in South Africa?
Families are doing the manufacturing. There was this perception that only India is good at polishing. But now they have started to understand that we as local producers can polish the same quality that the Indians are polishing. So the interest is there. It's just that we need to do more work in terms of marketing and trying to let the people understand. We can produce that same type of quality.
Where do you see yourself in the next five years?
I definitely want to see myself among the key players in the diamond industry beneficiation. And one of the key drivers of mineral beneficiation in the country. Then internationally. And then I'm also looking in terms of, in the coming years, to join the entire value chain, that is to mine, beneficiate, and export.
Mathew Nyaungwa, Editor-In-Chief, Rough & Polished
Produced and published as part of the project "Best practices have a voice"
