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Unlocking Value in Diamond Beneficiation for Nambia

Stephen Lussier, Forevermark CEO, De Beers Group, stated at the second International Diamond Conference that it has been a ‘really tough time’ in the beneficiation sector.
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The second International Diamond Conference, also known as ‘Omugongo: A Cut Above The Rest’, was recently held in the Windhoek, Namibia.

In his speech, themed ‘Diamond Beneficiation: Think global. Think Local’, Lussier said that the ‘ambitions and desires’ of government partners with regard to beneficiation was fully understood and appreciated.

“We are committed to playing our role in helping achieve these ambitions. Namibia’s success is our success; that is why achieving sustained beneficiation targets, is as much a key strategic priority for us, as it is for government. We are also under no illusion concerning our producer partners’ need to earn a return on their capital to be sustainable.”

He said that the fortunes of the Namibian beneficiation sector would be better served via an approach that may sound simple, but is in fact extremely complex – i.e. driving polished diamond value growth.

This argument was recently made by one of the leading representatives of the diamond-banking sector, Erik Jens of ABN AMRO.

Jens noted that the entire midstream would benefit most from looking at how to increased polished prices, rather than lobbying to push down rough prices. “Clearly this would also support the prospects of those operating in beneficiation centres, but it is easier said than done.”

Industry expert Chaim Even-Zohar, who moderated the panels at the conference, said that despite the downturn, Namibia is still in a strong position. He argued that the country produces some of the best quality diamonds in the world, which often sell for high prices.

Namibia is a world leader in marine diamond mining with estimated 1.5bn carats on its seabed. The Namibian government and De Beers Group have 50:50 shareholdings in the Namibia Diamond Trading Company, with De Beers supporting the domestic cutting and polishing industry in the country.

No resource curse

“In this country [Namibia], there is no ‘resource curse’ and prudent government action over two decades has resulted in progressively increasing benefits from the nation’s diamond patrimony,” said Maurice Tempelsman, chairman of the board of directors of Lazare Kaplan International Inc.

He added: “Part of leadership lies of course in recognising that history provides no reliable trajectory—that past success offers no guarantee of future progress”.

He called for structural shifts. “Beneath the economic storms of the present, which I think we can all assume will at some point give way to clearer weather, I believe that the ground is shifting under our feet—indeed, already has shifted, so that the foundations we used to rely upon not only are no more, but pose active dangers.”

He referred to recent developments he was concerned about including the ‘gaming’ of the polished diamond certification system, which undermines a key pillar of consumer confidence; the fraudulent ‘salting’ of parcels of natural polished diamonds with synthetics; and the relative absence, despite all the good effort invested in the Kimberley Process, of a mine-to-finger chain of custody sufficient to satisfy buyers—particularly those whom Namibia and most of present at the conference should be most concerned with, namely buyers of high-end jewellery where diamonds form the centerpiece.

“We must think of a security agency with no essential stake in the health of our industry, with a power and driven by a purpose that leaves us with no room for complacency.

The point is not to apportion blame, but to observe that new structures, new relationships, new ways of thinking and operating, have to be forged in an industry which may have its eyes on the future but remains restrained too much by the dead hand of the past,” said Tempelsman.

He concluded: “I believe this to be a matter not just of political inevitability, but of intellectual and strategic necessity. There are resources which sovereigns can bring to bear that the industry cannot; nor can we in the private sector pretend that we have all the answers, or that matters are best left to ourselves alone.”

 An industry in crisis

Burhan Seber, MD for Hard Stone Processing and former president of DIAMAN, highlighted the distress experienced by manufacturers.

“The industry is in crisis. Manufacturers have been facing crippling challenges since 2011. These and added troubles have brought the complete diamond pipeline under critical strain and to a tipping point.”

He added that there was very little doubt that the current model had 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.”

Meanwhile, the Diamond Commissioner of Namibia, Kennedy Hamutenya, expressed the national sentiment around beneficiation: “We want to be part of the downstream business and want to know what happens to the value of our diamonds. 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 added and foreign exchange revenue.”

The second International Diamond Conference this year brought together more than 150 stakeholders from across the globe, including ministers, industry experts, academics, business leaders, manufacturers and the media.


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