Diamond beneficiation in crisis

The fortunes of the diamond value chain would be better served through a simpler structure as opposed to the extremely complex approach currently used. Such an re-alignment will be the driving force for polished diamond value growth.
The Chief Executive of Forevermark and the De Beers Group, Stephen Lussier alluded to a simplification of the diamond value chain in his speech before the second International Diamond Conference, titled, Omugongo, held last week in Windhoek. More than 50 international industry experts, academics, business leaders and manufacturers converged on Windhoek for this landmark two-day conference.
Their goal: to discuss challenges facing diamond beneficiation in Southern Africa on how to make this industry viable and sustainable.
The Diamond Commissioner of Namibia, Kennedy Hamutenya, expressed the national sentiment around Beneficiation: “We want to be part of the downstream business, we want to know what happens to the value of our diamonds”.
“The opportunity cost for us is the polishing and cutting diamonds elsewhere, losing a major chunk of share in the pipeline”, “We need the bulk of our Namibian diamonds to also work for us, to create job opportunities, to transfer skills, to transfer technology, to bring to Namibia more value adding, more foreign exchange revenue…”
Representing the diamond banking sector, Erik Jens of ABN AMRO,said it is easier said than done, noting that the entire midstream would benefit most from looking at how to increase polished prices, rather than lobbying to push down rough prices. This would also support the prospects of those operating in beneficiation centres.
The De Beers Group CEO Lussier said it has been tough in the beneficiation sector and that understanding and appreciating government partners’ ambitions and desires when it comes to beneficiation and commits both to playing a role in helping achieve these ambitions.
Namibia is seen as a world leader in marine diamond mining, with an estimated 1.5 billion carats on its seabed. The government and De Beers Group have 50:50 shareholding in the Namibia Diamond Trading Company, with De Beers supporting the domestic cutting and polishing industry.
Chairman of the Board of Directors of Lazare Kaplan International Inc. Maurice Tempelsman, said “In this country, there is no resource curse,” and that “Part of leadership lies of course in recognizing that history provides no reliable trajectory—that past success offers no guarantee of future progress.”
Industry expert Chaim Even-Zohar, who moderated the panels at the conference, said that despite the downturn, the country is still in a strong position.
He stated that Namibia produces some of the best quality diamonds in the world, which often sell for high prices.
The Honorary Consul of Turkey and Managing Director Hard Stone Processing, Burhan Seber, highlighted the distress experienced by manufacturers:
“The industry is in crisis. Manufacturers have been facing crippling challenges since 2011. These and other troubles have brought the complete diamond pipeline under critical strain and to a tipping point.”
He said the current model has failed. Is ‘beneficiation’ over?”
“Take away profit, and there can be no beneficiation. In hard times, when companies regroup and consolidate towards their power base, their foreign investments tend to be the first out. Beneficiation is not an act of charity, but an act of sharing. “
The conference concluded with a prestigious Gala dinner addressed by the Prime Minister, RT Hon. Dr Saara Kugongelwa Amadhila. Some 300 guests attended the dinner hosted by the Ministry of Mines and Energy in the Parliamentary Gardens at the Tintenpalast.