Plan to create diamond, jewellery manufacturing hub
JOHANNESBURG - THE STATE Diamond Trader plans to establish a diamond and jewellery manufacturing hub to address the decline in diamond manufacturing, it told Parliament's portfolio committee on mineral resources and energy yesterday.
Chief executive Stanley Mandla Mnguni said the hub was developing a diamond beneficiation strategy.
Mnguni urged lawmakers to review the effectiveness of legislation and to create a conducive environment for the industry, citing rigid laws and the low tax incentives as reasons for the decline in manufacturing.
“Once we establish a diamond hub, we will address some of those issues,” Mnguni said.
The State Diamond Trader's mandate to buy and sell rough diamonds and promote beneficiation was being undermined by the current legislation, the entity said.
Operations manager Conrad van der Ross told the committee that more dealers than companies were focused on beneficiation, which contradicted the entity's mandate.
Van der Ross said the low number of benefitiatingbeneficiating firms was because diamond dealers faced fewer restrictions in terms of exports.
“The landscape has changed, people are applying for dealing licences because it is easier to export. More rough diamonds are being exported than beneficiated,” said Van der Ross.
The diamond industry faced a volume challenge as 85 percent of production could not be done economically in South Africa.
Mnguni conceded that South Africa lagged behind in achieving cost efficiencies in producing diamonds.
“The cost of manufacturing diamonds in South Africa is too high compared to countries like India, which has low costs. We have to look at whether technology cannot assist in cutting costs,” Mnguni said.
The entity said the local industry faced several challenges, including a lack of private and public funding and difficulties in accessing rough diamonds.
The red tape in issuing licences, limited online trading platforms, and the absence of South African diamonds were also problems.
The diamond industry's workforce had shrunk from 1 200 three years ago to less than 900, of which 600 were involved in polishing and cutting, and 300 were administrators.
In the 2018/19, the State Diamond Trader inspected 9 million carats, down from 10 million a year earlier, as the diamond industry experienced the decline in rough diamond production over the years which intensified during the period under review.