The efforts taken by some African countries to create their own diamond-cutting industries was the main subject discussed at the Antwerp Conference.
As is known, this process is actively facilitated by De Beers, whose major production facilities are concentrated in Africa and 15% of their stock are owned by the Botswana Government.
On October 29, NDTC (a joint venture of De Beers and the Government of Namibia) for the first time delivered its products to five sightholders.
Trau Bros, Namgem (managed by Lazare Kaplan), Lev Leviev’s LLD, Namcot (owned by Beny Steimetz) and Hardstone Processing were the first five companies, which bought their diamonds at the one-day sight.
Another six companies are scheduled to become sightholders starting from March 31, 2008 when their workshops will be ready to operate.
According to the terms of the agreement between De Beers and the Namibia government, NDTC will be selling about 2 million carats of rough diamonds worth $300 million to local entrepreneurs every year.
The information concerning prices and product types sold during the sight is not disclosed. The total value of rough diamonds sold at the sight exceeds $30 million.
As is known, diamond industry analysts have repeatedly expressed their apprehension that Namibia will not be able to provide gem quality diamonds in declared quantities to its entrepreneurs. Kennedy Hamutenya, Diamond Commissioner, Ministry of Mines and Energy of Namibia, had to admit these doubts to a certain extent in his interview to Rough&Polished: “We may not have enough goods tomorrow but we can always talk to our neighbors and to our partners to see how we can advance our agenda. Our goods will add value to the aggregated goods in Botswana and perhaps Botswana can retaliate by also helping our factories with their huge quantity of diamonds. Maybe ALROSA will also help supply our factories with goods.”
On November 14, DTC Botswana circulated its press release announcing the results of the first application process for the supply of rough diamonds to manufacturers in Botswana. “After undergoing a robust and objective evaluation process,” 16 license holders were recognized as meeting the criteria and became sightholders of DTC Botswana for the three-year contract period (2008-2011). “It is expected that $360 million of rough diamonds will be sold by DTC Botswana to Sightholders in 2008, with this amount set to grow to $550 million by 2009,” the press release said. “We’ll be supplying them directly here in Botswana from April 2008. This will help create in excess of 3,000 jobs, new skills and foreign capital investment in Botswana,” commented Brian McDonald, Managing Director of DTC Botswana.
The following companies appeared to be the lucky holders of contracts with DTC Botswana: Ascot Diamonds, Dalumi Botswana, DDA of Botswana, Diamond Manufacturing Botswana, Eurostar Botswana, H& A Cutting Works Botswana, Lazare Kaplan Botswana, Leo Schachter Botswana, Moti Ganz Botswana, Pluczenik Diamond Company, Rand Precision Cut Diamonds, Safdico Botswana, Suashish Diamonds Botswana, Teemane Manufacturing Company, Yerushalmi Brothers Diamonds Botswana and Zebra Diamonds (IGC Group).
Botswana President Festus Mogae told the Mining Weekly that for the first time diamond cutting and diamond polishing were now taking place in Botswana, which wanted to be “no less” a diamond cutting-and-polishing centre than Antwerp, Ramat Gan and Mumbai. According to the President, Botswana does not require the leading diamond cutting and polishing companies to transfer their activities to Botswana, but asks them to include his country in the list of places where they cut and polish their diamonds. “Just as they have factories in New York, London, Antwerp, Mumbai, Thailand and others, they should have a factory here,” he declared.
The law recently passed in the Republic of South Africa and called “The Diamond Act” obliges local mining companies to sell 10% of extracted diamonds (in terms of value) to the State Diamond Trader (SDT) of the RSA on an annual basis. The Act is seeking to stimulate diamond treatment business at local factories, since the STD is to avail rough supply to local processing enterprises.
It is reported that the STD runs against budget limitations during its first year of activities as a rough supplier to the RSA market.
The company said that it had a stock of rough diamonds worth only $2-3 million available for the first trading session in January 2008 (De Beers accounts for 90% of this amount), but in future it intends to increase this indicator up to $5-6 million and maybe even up to $12-14 million, as the “Business Day” reported in mid-November.
The budget of the State Diamond Trader of the RSA in its first business year will amount to approximately $63 million with a possible view of building it up in case of market success.
The annual output of rough diamonds in the RSA is equal to $1.4 billion and the SDT has the right to get $140 million worth of diamonds a year or for $12-14 million per sight. Presently, the SDT is not allowed to attract overseas funds, but the representatives of Industrial Development Corporation, an investment company, said that this limitation may be lifted and business would prove its creditworthiness.
Any outside financing must be preliminarily permitted by the Ministry of Minerals and Energy of the RSA.
Let us remind you that at the Antwerp Diamond Conference South African Minister Bujelwa Sonjica asked ALROSA President Sergey Vybornov, if Russia would be ready to supply rough diamonds to diamond treatment factories in South Africa. The political effect important for the South African Government and derived from the beneficiation strategy was achieved in early November, when this country launched its first diamond-cutting enterprise belonging to black owners.
Mohseen Valli Moosa, Senior Executive Director of young company African Romance told that in 2005, South Africa mined 12 million carats of diamonds, but only 1% of them were processed in this country.
African Romance receives its diamonds from a sister company partially owned by Etruscan Diamonds, a Canadian mining company, operating in team with the Mogopa Community in the North-West of South Africa, where the diamond deposit is located.
Moosa said that his company had a 4 000-carat diamond stock and that the company was capable to produce 30 cut diamonds a day.
Moosa is a former Chairman of the Parliament Committee, which prepared a bill aimed at building up a local diamond-cutting industry as well as at attracting more black players into this industry.
The month, which started with the Antwerp Diamond Conference ended with an issued appeal from U.S. jewelers to Varda Shine, Managing Director of DTC, whereby they required observing a balance between stimulating African diamond-cutting enterprises and supplying rough diamonds to U.S. sightholders. One may suggest that U.S. jewelers were impelled to act both by continued efforts of African countries to develop their own diamond cutting, as well as by the success of Tiffany & Co in finding other sources of rough diamonds. On the one hand, a word leaked out that a long-term supply contract was possible between Tiffany and ALROSA. Besides, Tiffany has already entered into a marketing agreement with Target Resources of Sierra Leone, which guarantees exclusive rights for the supply of diamonds.
Calling to “make efforts to preserve the New York status as a major diamond-cutting center”, the Diamond Manufacturers & Importers Association of America (DMIA) points out in its letter that it is the first step within an initiative to avail a long-term supply of rough diamonds to American diamond manufacturers. DMIA President Ronald Friedman declared that his letter to Varda Shine reflected “the concerns of the American diamond industry over this very sensitive problem.”
DMIA intends to start a campaign reaching out to members of the U.S. Congress, politicians and the U.S. Government to leverage the enormous amount of U.S. foreign aid to the benefit of American diamond manufacturers.
Copied on the DMIA’s letter were not only to De Beers’s top executives Nickolas Oppenheimer and Gareth Penny but also to a number of key government officials, including Condoleezza Rice, Hillary Clinton, Michael Bloomberg and others.
