Address by the Deputy Minister of Mineral Resources, Honourable Godfrey Oliphant, MP at the 2016 Diamond Indaba held at Gallagher Convention Centre
Programme Director, Ms Nosipho Mbanjwa
MEC of Limpopo Economic Development Environment and Tourism, Mr Charles Sekoati
Chairperson of the Parliamentary Portfolio Committee for Mineral Resources, Hon Sahlulele Luzipho
Chairperson of the State Diamond Trader, Mr Mervyn Carstens and fellow Board Members
CEO of the State Diamond Trader, Ms Futhi Zikalala Mvelase
President of the World Federation of Diamond Bourses and President of Diamond Dealers, Mr Ernie Blom
Chairman of DeBeers Consolidated Mines, Barend Petersen,
President of Young Diamond Benefactors, Mr Molefi Letsiki
CEO of De Beers Consolidated Mines, Mr Phillip Barton
Chairperson of the South African Diamond Manufacturers Association, Mr Prince Mbetse
Acting CEO of the South African Diamond and Precious Metals Regulator, Mr Cecil Khosa
Chairperson of the Rough Diamond Dealers Association, Mr Jan Nortje
Ambassador of Belgium to South Africa, His Excellency, Mr Hubert Cooerman,
Representatives of the Royal Thai Embassy here present,
Diamond producers and manufacturers both in South Africa and abroad
Senior Government Officials,
Distinguished guests
Ladies and gentlemen
Let me firstly extend my thanks to the CEO of the State Diamond Trader Ms Futhi Zikalala Mvelase for inviting me to address you this morning. It is indeed with great pleasure that I welcome you all to the second annual South African Diamond Indaba 2016. Allow me to also extend my appreciation to the various organisations whose partnership has enabled the realisation of this important engagement.
Let me pause here to recognise a liberation icon, former President of the African National Congress Women’s League, the evergreen Winnie Madikazela Mandela on her 80th birthday today. I have often been struck while travelling abroad at the role of the elders in business, government and community while in South Africa we loose this capacity at 60 or 65 years. Globally we know with advances in health that 60-70 is the youth in this cohort of elders, those who are between 70-80 are the teenagers, and over 80 are the elders of the elders. Lets change this culture and ensure that we recognise and leverage of the experience and capacity of our elders here in South Africa.
September marks Heritage Month for South Africa, and I’m sure you would agree that diamonds, and indeed all our mineral wealth, form part of our heritage. For over 100 years, diamonds have been synonymous with South Africa, and today the country remains one of the most important diamond, gold and platinum producers in the world. Here I have touched on only 3 of the over 50 minerals produced in South Africa and the over 100 years more of mining ahead. We have in our jurisdiction the most diverse range of diamond deposits in the world. Kimberley, in the Northern Cape is testimony to this. The Big Hole in Kimberley is an entirely man-made structure; the largest hand-dug excavation in the world. It is here, back in 1871 that many came to seek their fortunes.
Yet this rich culture and heritage as being one of the world’s most productive and lucrative locations for the supply of diamonds has left a tale of two cities more than a century later. Industrious, rich and prosperous on the one hand yet surrounded by poor, poverty stricken communities that barely survive on government grants and transfers. Similarly, Langlaagte in Johannesburg is where gold was first discovered in 1886. The site at the Gordon Harrison Park– a heritage site in Langlaagte has been closed for some time. National Monuments that speak to our history should be preserved. Its purpose to reflect our past in all its pain and glory should not be neglected but used to instil a sense of belonging and patriotism. It is the failure to protect and preserve these sights that has left the door open to illegal miners or the so-called “zama-zamas”
The theme for this Indaba: “Enabling South Africa to become the heartbeat of diamond beneficiation in Africa”, with the sub-theme, ‘Driving competitiveness for growth and transformation in the diamond industry’, provides us with a vision and direction in terms of why we are gathered here today, and therefore what we wish to achieve from today’s engagements.
In order to achieve this, the deliberations today should focus on the following: Identifying the country`s diamond beneficiation industry vision, which we are to achieve by 2026; proposing mechanisms of attracting foreign investments into our country; as well as identifying methods of developing our business brand as South Africa.
Government has recently given a further boost to beneficiation, through the Nine Point Plan announced by President Jacob Zuma last year, which aims to boost economic growth and create much-needed jobs. One of the key elements in this plan is ensuring that we advance the addition of value to our raw minerals.
The development of the downstream sector of the diamond value chain in South Africa, as advocated in the legislation, has immense economic potential. It will stimulate business development and create meaningful transformation in the industry, while offering a real opportunity for inclusive and active participation of black people, women and youth in the downstream value chain. This will assist us to achieve sustainable socio-economic development and reduce poverty.
Diamonds are amongst the world’s major natural resources with an estimated US$13 billion worth of rough diamonds produced per year. Nevertheless, the world’s rough diamond output rose by 2.1 percent to 127.4 million carats (Mct) in 2015, valued at just under US$14 billion, with South Africa retaining its ranking as the 7th largest producer by volume, after producing 8.2 Mct. Approximately 40 percent, by volume, of the country’s rough production is sold locally to the cutting and polishing industry, while the rest is exported to various destinations, including India, Israel and Belgium – which you would be aware are the three main diamond manufacturing and trading centres.
The diamond industry was one of the sectors which were most affected by the downturn in the global economy. We have seen a drop in the rough diamond production as well as contraction of the cutting and polishing activities in the country. In addition, diamond prices have also struggled to regain momentum post the global economic crisis, due to slow demand from major polished export markets such as the US and China. Furthermore, given the prevailing economic conditions, rising uncertainties and growing volatility the world over, the prospects for luxury items such as diamond remain uninspiring.
Diamond beneficiation data from the South African Diamonds and Precious Metals Regulator (SADPMR) shows a 100 000 carat decline in diamond beneficiation between the years 2010/11 and 2011/12. According to an industry report, demand for diamond jewelry grew in 2015 in the United States, supported by a sustained economic recovery and an improved labour market. United States’ sales advanced 5 percent to $39 billion, while China continues to grow from an increasingly large base. This indicates that there is still a significant demand for our diamond jewelry even under such global economic strain.
As part of our commitment to investing in the growth of our country, we have developed key policies to promote and implement beneficiation of our raw minerals. Within the industry, the focus has been on developing the diamond cutting and polishing industry, with the establishment of the State Diamond Trader and the South African Diamonds and Precious Metals Regulator and other legislation to encourage such activity.
Government has long realised the need to move away from being just a producer of raw diamonds for the export market, and has developed and adopted a strategic policy to promote mineral beneficiation within the country. This strategic policy provides a framework for the orderly development of the country’s mineral beneficiation value chains. The strategy identifies five key constraints to our local mineral beneficiation, which are identical to the challenges raised in the inaugural Diamond Indaba last year. The constraints are: the limited access to raw materials; the shortage of critical infrastructure; limited exposure to research and development; inadequate skills; and lastly access to international markets.
Ladies and gentlemen, to unlock these constraints, the strategy proposes a four-pillar framework. The pillars of this framework are:-
- Enabling regulatory framework which looks at strengthening and coordinating various pieces of legislation to ensure amongst other things, security of raw material supplies at competitive prices, leveraging incentives and tax legislature to support research and development, financing for industrial projects and training.
- Use of multi-stakeholder structures to inform value chain specific strategies and coordinate the implementation and monitor the impacts of said categories.
- Development of value chain specific strategic interventions which are necessitated by the unique nature of some interventions that would be required for specific value chains.
- Leveraging on bi-lateral and multilateral agreements to facilitate access to markets for locally beneficiated mineral projects.
I urge all of us here today to go back and look at this framework so that diamond beneficiation becomes a major driver in advancing the empowerment of historically disadvantaged individuals in our country, as it presents opportunities for the development of new entrepreneurs in the small and micro businesses.
I would like to commend stakeholders for the sterling work done in this regard. One of those is De Beers, which has taken the template suggested in the beneficiation strategy and implemented it as a pilot project. I further urge you to continue to work together in partnership with government for the advancement of our country.
As a sector, we face many challenges in our effort to grow and increase the production of high- quality polished diamonds. It is critical that we today set out realistic expectations and deliverables that will position this industry on a sustainable growth path and position the country as the “heartbeat of diamond beneficiation in Africa”. To achieve this, I am convinced, we will need to work together more closely and far more consistently than ever done before.
Thank you.
