Johannesburg - The troubled State Diamond Trader (SDT) has appointed a new chief executive to replace Abbey Chikane, whose contract was not renewed last year - apparently amid clashes with the chairman, Linda Makatini.
Futhi Zikalala takes over as the new chief executive from tomorrow. She has been acting in the post since she joined the state-owned intermediary on secondment from the department of minerals and energy.
The SDT was launched in February last year by minerals and energy minister Buyelwa Sonjica, together with the SA Diamonds and Precious Metals Regulator.
At the time, Sonjica said that extending South Africa's world-class status as a producer of diamonds and precious metals further downstream into fabrication was one of the objectives of the government.
The two entities were a product of the government's commitment to maximising value addition for the country's mineral resources, with particular reference to diamonds and precious metals.
The SDT is entitled by law to purchase - at fair market value - up to 10 percent of diamond producers' output, which it then sells to the local cutting and polishing industry to encourage newcomers.
But producers that sell high-quality alluvial stones on auction are fearful that the new system will deprive them of revenue. Bids currently differ by up to 50 percent, as diamond dealers inflate offers if they have specific clients in mind.
Last October Ernest Blom, the president of the World Federation of Diamond Bourses, told Mineweb that the South African downstream diamond industry was suffering as the SDT was not providing the sector with an adequate supply of rough diamonds for beneficiation. The industry was no longer receiving a supply of rough diamonds from Diamdel, a subsidiary of De Beers.
He reportedly said that the trader was buying only about 3 percent of De Beers' domestic diamond output for supply to local diamond cutters and polishers, whereas it was set up to source 10 percent of South Africa's rough production for this purpose.
As a result of the shortfall, the local beneficiation industry had shrunk from about 3 000 diamond cutters and polishers to about 1 500. Some of the beneficiators had left South Africa in favour of countries such as Botswana, which offered better job security.
Norman Landman, the general manager of Zurel Brothers, a diamond cutter and polisher with a factory in Polokwane, said he understood that the SDT had sorted out its problems with De Beers.
Zikalala was not in her office to confirm this.
Landman said Zurel wanted 1 000 carats of diamonds a month as a bare minimum but the SDT could only supply it with between 200 and 300 carats.
"Just when we thought we had won the battle with the trader and De Beers, the industry has been hit very hard by the global crisis," said Landman.
"I have heard of three companies that have had to close down in this country recently. People are not buying diamonds. You are sitting on stock that you cannot sell. Even South African companies won't sell. Some are putting staff on short time."
He said the only reason that Zurel was still in business was because it was doing skills training. "I have taken my full-time people into being trainers. We don't want to retrench because we have spent a lot of time and money on our staff. So the secret is training."
Landman said Zurel, which currently employed 550 people, would increase its staff complement to 700 by March.