Address by the Honourable Minister of Mineral Resources, Mr Mosebenzi Joseph Zwane (MP), at the inaugural South African Diamond Indaba, Sandton Convention Centre
Programme Director,
The Chairperson and Board members of the State Diamond Trader State Diamond Trader CEO Ms Futhi Zikalala Mvelase
Diamond producers and manufacturers both in South Africa and abroad Members of the media
Distinguished guests Ladies and gentlemen
I would like to take this opportunity to welcome you to South Africa’s inaugural Diamond Indaba, and to also extend my gratitude to the various organisations whose partnership has enabled the realisation of this important engagement.
This Indaba takes place during a time when the mining sector is facing global economic challenges such as weak commodity prices. I would like to urge the leadership of the industry to continue to work with Government in addressing
these challenges, which should include positioning the industry to take advantage of the next commodity boom.
Ladies and gentlemen, we are meeting here today to reflect on the diamond industry and how we can stimulate competitiveness and profitability through an integrated process predicated on the entire value chain.
Diamonds are amongst the world’s major natural resources and play a critical role in the global economy. In 2014, the world produced some 124.8 million carats of rough diamond, valued at just over US$14 billion. The majority of diamonds, approximately 65 percent, are found in Africa and are derived from both primary kimberlitic sources and alluvial sources. African countries like South Africa, Angola, Botswana and Namibia derive important revenues from diamond mining, which have played an important role in the socio-economic development of these countries. South Africa is still a significant producer of rough diamonds and is ranked the 7th largest producer by volume in the world. A substantial quantity of these diamonds are exported to various destinations, primarily India, Israel and Belgium, the three main diamond manufacturing and trading centres.
As a nation we need to maximize the value of the diamonds that are mined in the country through focused beneficiation. This is in line with one of the elements of the Nine Point Plan, namely “Advancing beneficiation and adding value to our mineral wealth”, which was announced by President Jacob Zuma in his State of the Nation address earlier this year. We would thus need to ensure that our deliberations here today are aligned to this objective. Similarly, we welcome the Mining Phakisa, as it will further assist us in finding a win-win situation to
accelerate our growth and development objectives, through mineral beneficiation and other strategic initiatives.
Correspondingly, today’s deliberations should help us to reflect at our current legislative framework and explore ways of increasing the beneficiation of diamonds in the country. We need to enhance our cooperation in this endeavor and forge a coordinated approach to address the current challenges and arrest the declining cutting and polishing diamond sector.
It is also necessary for stakeholders to develop a common vision and set out realistic goals that will propel South Africa to become the heartbeat of diamond beneficiation in the world. The task is not impossible – what is required is candid discussions on the challenges that face the sector and identification of practical implementable interventions. Some of the critical challenges are well known to you – these include limited access to rough diamonds, lack of finance and difficulty in penetrating polished diamond markets. Furthermore, South Africa is reported to be lagging behind in the establishment of its own niche brands and is facing growing competition in the global arena when it comes to jewellery beneficiation due to lack of competitive skills and technology. Accordingly, it is necessary for us as an industry to look at improving our competitiveness and adapt to processing the type of diamonds we have access to in South Africa as a means to create a labour-intensive sector. The State Diamond Trader has completed a report looking into the state of diamond affairs in South Africa, as well as global market dynamics and economic variables. I look forward to the deliberations about the recommendations contained in the report.
We are all aware that the South African mineral and mining industry has historically been deeply racialised. The situation needs to be addressed through
meaningful transformation across the entire value chain. We need to see more Black people, women and youth playing a significant role in mining as well as in the cutting and polishing diamonds. In this regard compliance with relevant statutes should form the basis of a license to operate in order to enable optimal sustainable exploitation of South Africa’s diamonds, consistent with the National Development Plan and the African Mining Vision.
The African Mining Vision also identifies natural resources, especially minerals, as a key sector to spur development and industrialization of the African economy. Given the heritage of mining in the continent, coupled with the concept of limited mineral resources, Africa has recognised the need for a knowledge- driven mining sector that contributes to the broad-based growth and development of a fully integrated African market through down-stream linkages into mineral beneficiation and manufacturing. Skills shortages have also been identified as a major challenge in the sector, and it is thus important for Africa to learn from some of the global leaders in the polished diamond market using modern equipment and technology for cutting and polishing.
As a founding member of the Kimberley Process Certification Scheme (KPCS), we are proud of the achievements made in stemming the flow of conflict diamonds. In this regard, we look forward to deliberations which will take place at the KPCS Plenary in Angola next month.
The African Diamonds Producers Association (ADPA) remains relevant and critical for the continent, and further cements the notion of regional integration, consistent with South Africa’s foreign policy. The enhancement of cooperation through ADPA will strengthen the African diamond industry and improve the livelihoods of the respective populations of ADPA member States. This will also assist towards changing the image of African diamonds and increasing their demand in the global market. In this regard, South Africa has played a significant role in the recognition of ADPA as a Kimberley Process Independent Observer, giving the continent’s diamond producing countries a bigger voice in dealing with issues affecting both regional and national interest.
Ladies and gentlemen, today we will be witnessing the launching of the South African Young Diamond Beneficiators Guild, a collective of South African predominantly black-owned small and emerging diamond manufacturers who have seen it necessary to change the future narrative of the South African diamond beneficiation industry. These diamond manufacturers, will primarily focus on the cutting and polishing of rough diamonds. I anticipate that these young diamond beneficiators will serve as a mouth piece of the small and emerging manufacturers in diamond beneficiation, with a keen focus to develop mutually beneficial relationships for its members with other industry stakeholders.
We are firmly of the view that the future of the diamond industry in South Africa remains bright. There is still considerable potential for the discovery of other world-class deposits through modern exploration techniques in areas yet to be exhaustively explored. Furthermore, investment in state-of-the-art exploration technologies would enable new discoveries that conventional geological surveys could not find. Research and development in modern diamond exploration techniques will therefore be critical in maximizing the potential of finding other world-class diamond deposits, and can also be focused on ore bodies currently considered marginal or sub-economic.
I am mindful of the possibility of synthetic diamonds in the market, at times referred to as “man-made” diamonds. These diamonds have been proven to be physically and chemically indistinguishable from natural diamonds. In addition, the costs of processing these diamonds is less than those associated with producing natural diamonds. As such, they have huge potential of threatening the diamond market in terms of “price advantage”. Accordingly, it is essential that proper mechanisms are put in place to ensure that natural and synthetic diamonds are distinguishable and do not pose a threat to the value of existing natural diamonds.
We will continue to promote South Africa’s diamond industry globally to ensure that the country remains an attractive investment destination of choice. Our recent participation at the Hong Jong Jewellery and Gem Fair is an effective channel to tap into the Asian market, including the Chinese mainland and Hong Kong markets. The participation gave twenty emerging South African entrepreneurs an opportunity to showcase their jewellery and gem products and to further engage with potential investors. To this end, a Port Elizabeth jewellery maker has been commissioned to produce designs for an international company to celebrate its 120th anniversary.
As I conclude I would like to urge all participants to remain committed to efforts to grow and sustain the diamond industry even during these difficult economic times. I further wish you well in all your deliberations and I am confident that the meeting today will yield positive outcomes that will move the South African diamond industry forward, while ensuring that South Africa is the heartbeat of Africa’s beneficiation. I know that we will continue working together in all our stakeholder engagements for the benefit all South Africans.
I thank you.
