Hon. Minister Mpofu: Minister of Mines and Mining Development
Hon. Prof. Dr. Francisco Queiroz; Minister of Mines of the Republic of Angola
Hon. Pascal Muhindo Songe Luyeye: Secretary General representing Martin
Kwabwelulu Labilo: Minister of Mining of the Democratic Republic of Congo
Hon. Isak Katali: Minister of Mines and Energy of the Republic of Namibia
His Excellence Ambassador: Welile Nhlapo
Her Excellency Ambassador: Gilllian Milovanovic, KP Chair
Ministers and Deputy Ministers
Ambassadors present, members of the Diplomatic Corps
Mr. Eli Izhakoff: President of the WDC
Mr. Ernie Blom, President, World Federation of Diamond Bourses
Mr. Ahmed Bin Sulayem: Executive Chairman: Dubai Multi Commodities Centre (UAE)
Mr. Peter Meeus, Chairman of Dubai Diamond Exchange
Mr. Vasant Mehta, Vice President of the International Diamond Manufacturers
Association
Mr. Stephane Fischler, President of Antwerp World Diamond Centre
Mr. Reuven Kaufman, President of the Diamond Dealers’ Club of New York
Mr. Nivra Jugani, Coordinator of Surat Rough Diamond Sourcing (india)
Mr. Chaim Even-Zohar, President of Tacy Ltd
Distinguished Guests
Ladies and gentlemen,
I want to thank and applaud the Zimbabwe Government for hosting this conference for firstly and most importantly organizing this important event where we as Africans can rally in open dialogue on the challenges and shortcomings facing this industry/sector and possibly recommend actionable solutions. And secondly, for deeming it appropriate to afford me the opportunity to address this conference. It is an honor to address you and especially fitting that an esteemed gathering and has heeded Zimbabwe’s call to explore the changing dynamics in the international diamond industry and how best Zimbabwe can exploit its diamond wealth.
It is not so long ago that Zimbabwe, particularly the Marange diamond fields, was in the news for alleged human rights violations which led to an impasse in the Kimberley Process for a while. I am both proud and filled with joy to declare that we were collectively able to overcome that obstacle and your presence here today bears testament to that.
As South Africa, along with the rest of the South African Local Government Association (SADC) countries, we are committed to ensuring that the economic sanctions imposed on Zimbabwe are lifted. As a collective we have impressed upon the Zimbabwean government to speed up the reforms needed to bring about change. After all, these sanctions don’t just affect Zimbabwe alone but Africa as a whole. And it is with that in mind that SADC has appointed a task team that will work jointly with the monitoring and implementation committee towards the implementation of all the outstanding issues.
Ladies and gentlemen, this occasion presents a number of opportunities for Zimbabwe across the entire diamond value chain, which entails encouraging integration between producers and beneficiators by sharing value realised from selling polished diamond, establishing diamond beneficiation and jewellery hubs or export processing zones.
These are some of the opportunities that can be explored but of course they may need a substantial amount of capital to get them off the ground. After all, this industry requires substantial amount of capital and financing, which is vital to the downstream industry’s very existence.
This is because of the coalescence between the costly nature of the industry’s raw materials, equipment and the time-honoured persistence by the main rough diamond producers for their clients to pay cash on (or even before) delivery. In addition no substantial trading and cutting business can flourish without a supportive banking environment and many of the trade practices have evolved around the services and requirements of specialised diamond banks.
When entering into a new industry and while learning the ropes, partnerships with key industry players is essential in order to study how other countries have managed in such a short space of time, to conquer the industry. One such key industry player is India, which recently hosted the World Diamond Congress.
India’s diamond industry, which is estimated to grow by an average 10 to 15 percent each year in the next five years, accounts for 70-75 percent of total diamond exports in world and employs 850,000 people, making it the largest cutting hub by value and number of employees. Last year, the country’s import of rough diamonds rose 24.5 percent to 149.8 million carats against a year earlier, and export of cut and polished diamonds witnessed a surge of 28.3 percent to 59.9 million carat.
The major factors for India’s success in this industry can be attributed to:
- favourable financing terms from banks which lowered the financial burden on diamantaires as raw material costs are a major cost driver in diamond cutting and polishing,
- Extensive use of modern manufacturing techniques and equipment which further drove down production costs,
- Zero taxes on rough imports and,
- Lower labour costs
Ladies and gentlemen this gathering presents a great opportunity to explore and develop partnerships that are vital in the building and strengthening the diamond industry. The industry has played a major role in the development of many countries, especially in developing jurisdictions. In Southern part of Africa many of you will be aware that South African economy grew through, amongst others, the contribution of diamond industry. Other countries such as Botswana and Namibia have benefited immensely from the same industry. The region is indeed blessed with endowment of these glittery stone.
The challenge is to ensure that we maximise the benefit emanating from the exploitation of this rare commodity that is mined from a resource that has finite lifespan. Accordingly we need to ensure that the diamond resources of region are exploited in a sustainable manner, which ensure future generations benefit from exploitation of this commodity.
To that end, both business and government should work together towards strengthening linkages of mining with other industries such as upstream and downstream value addition, technology, services and manufacturing, to ensure sustainable mining beyond ‘a hole in the ground’. This is what South Africa seeks to achieve through its Broad-Based Socio-Economic Empowerment Charter for the mining industry (Mining Charter).
The year 2012, has seen the diamond industry in murky waters with the gem price dropping to about 60 percent due to global economic downturn owing to a large extent, the euro debt crisis, low demand in China, and low economic growth in the USA. It is imperative that stakeholders in the industry should continue to explore ways of insuring that demand of diamonds is increased and use of diamonds is diversified.
It is said that 80 percent of mined diamonds, every year, are utilised by different industries and are very essential components when you speak of industries. We all acknowledge the important role diamonds play in everyone lives. They are important tools in designing concrete, eyeglasses, computer chips, ceramics, stones, and even other gems. They can be used in blades, in critical surgery, heat spreaders and for other special purposes. When thinking of diamonds, lets us not limit ourselves to mining it, simply for catering to the jewellery industry, as I have indicated, there are industries out there that we have yet to explore diamonds to their full potential.
The trading of diamonds has brought forth the inevitable need for cooperation between international and multinational institutions for governance of trade by organisations, such as the Kimberley Process Certification Scheme. This international effort has succeeded to rid the diamond industry of negative stigmatisation and provided conditions for uninhibited trading that conforms to internationally accepted trade conditions, and ensures that the glitter of diamonds is worn throughout the world without guilt or shame.
In hosting this esteemed international organisation next year, my Country, South Africa is looking forward to celebrating its 10th year anniversary at the place where it all started. This also provides a great opportunity for participants to marvel on its success and reflect on its short comings with a view of finding lasting solutions. South Africa further looks forward to interacting with participating countries, especially our close neighbours from who we can draw strength in our endeavour to ensure that revenues derived from trading in these precious resources benefit citizens and communities from which they are sourced.
In this regard Africa must show a greater determination to ensure that the shimmer of diamonds shines and illuminates the life of a child in the remotest village that has no access to basic amenities such as electricity and running water, than for it to be seen as a curse and catalyst of conflicts.
Ladies and gentlemen, let me take this opportunity to commend the Government of Zimbabwe and the diamond industry for taking the necessary steps and convincing the international community that indeed it complies with the KP statutes obligations. It is my pleasure to note that today Zimbabwe is trading in its diamonds in line with decisions taken at the KP plenary held in Kinshasa in November 2011.
This offers a great opportunity for the Zimbabwean government to harness its natural mineral endowments and to be a catalyst for a thriving industry that serves to contribute to the national developmental agenda.
According to the Kimberley Process statistics Zimbabwe is ranked amongst the top ten diamond producing countries and this is evidenced by the fact that after the notorious world diamond slump, Zimbabwe was one of the countries that rapidly realised notable increases in production as world diamond markets were gradually finding their appetite. For this Zimbabwe deserves to be congratulated.
In Conclusion South Africa would like to see the KP evolve not only in terms of its set goals and objectives but also in terms of strengthening its effectiveness and efficiency.
In evolving it is, however, important to ensure that the core mandate is not lost but rather that its implementation measures are strengthened to deal with the evolving challenges of the day. As the on-coming KPCS chair I look forward to welcoming you all to our beautiful and vibrant country and to your valued contribution to the vision that further enhances the strong heritage of the Kimberley Process and bequeath it to posterity.
I thank you.
