South African Minister of Minerals and Energy Phumzile Mlambo-Ngcuka wants diamond producers to retain a sizeable proportion of rough diamonds in the countries in which they were mined.
These are to be used in local cutting, polishing and jewellery industries, the Diamond High Council (HRD) in Antwerp said in its latest Antwerp Facets.
”The developed world has appropriated the production of polished diamonds and jewellery for itself. It is creaming the best of the revenue that comes out of the industry,” Mlambo-Ngcuka reportedly told the HRD.
”It has been decided that developing nations must only mine diamonds. We believe it doesn’t have to be like that. The pipeline has to be reconstructed.”
Mlambo-Ngcuka — the tough minister who introduced the new South African minerals legislation that has placed all mineral rights in the hands of the state — is forcing more African participation and ownership in the industry and is for the first time raising levies on mineral production.
”We are making it a condition of trading in South Africa that [mining companies] enhance our development and empower our people, provide new jobs and attract new investment — if they do not, we are not interested in their involvement,” she said.
Mlambo-Ngcuka also said that the South African government has called on De Beers to move functions of its Diamond Trading Company (DTC) to South Africa.
”We told them that, if they do not do it, we are going to find ways of regulating in such a way that this will be an option that they have to consider,” she said.
She was echoing remarks by the Botswana government where diamond producer Debswana, a 50/50 partnership between the Botswana government and De Beers, has been pressured to promote job creation in secondary industries through its diamond output.
Botswana Finance Minister Baledzi Gaolathe made clear in an interview that not only is this the case, but that Botswana is looking at ways of improving the already substantial benefits it derives from its diamond industry.
”We gain different benefits from mining,” said Gaolathe. ”Cutting and polishing of diamonds is within our programme. This need not be done by Debswana, but we would like to see De Beers and Debswana facilitating the supply of diamonds to the companies we may attract to cut and polish here.”
Like Mlambo-Ngcuka, Botswana President Festus Mogae wants more investment by De Beers in producer countries.
He recently said there is little room for improvement in the current profit-sharing arrangements, but there could be benefits in the DTC coming to Botswana.
”More De Beers functions could be devolved here — there could be a greater presence of De Beers in Botswana,” he said.
There are three cutting and polishing operations in Botswana, but they do not undertake a full range of operations.
De Beers MD Gary Ralfe, in Botswana recently for the ground-breaking of EuroStar, a fourth operation that plans to open in two years, disclosed that the DTC is suggesting to its shareholders that they establish cutting and polishing centres in producer countries such as Botswana.
At its first anniversary celebration in 2004, one established operation, Diarough, said it was producing 6 000 carats a month and was targeting 8 500 carats a month for 2005. The company is a DTC shareholder.
In 2004, Debswana’s four mines produced 31-million carats — 70% of the diamonds sold by the DTC and 30% of the world’s gem diamonds.
Botswana relies on diamond revenues for a direct 33% of Botswana’s gross domestic product, 75% of its foreign-exchange earnings and a direct 60% of government revenues. Indirect benefits are enormous. Few other industries would be around without the diamond mines. — Sapa