JOHANNESBURG (miningweekly.com) – At a robust "town hall" meeting in Johannesburg on Wednesday evening, the full-spectrum of the hard-hit South African diamond industry pledged to present a united plea to the South African government to accept new solutions aimed at boosting both the local industry and the country.

After initial finger-pointing by the various elements that make up the industry – from mining to sightholding and cutting and polishing – the head of the Masingita diamond company, MacDonald Temane, called on the struggling industry to close ranks and to unite in order collectively to solve problems brought about by the global economic meltdown, as well as changes to South Africa's regulatory framework.

De Beers MD Gareth Penny quickly took up the plea for unity and called on the heads of the various organisations that make up the South African diamond industry to meet in order to arrive at a set of workable solutions that could be jointly presented to the government "at the highest level".

South African Diamond Trading Company MD Faried Sallie was mandated to coordinate the solutions, which the industry would seek to present to the South African government in early 2010.

A follow-up "town hall" meeting would be held in Johannesburg in six months to review the dire situation confronting the local diamond industry.

Similar "town hall" meetings have been held in Belgium, Tel Aviv, Mumbai and Gaborone, with the Johannesburg meeting being hosted by Diamond Council chairperson, Ernie Blom.

The meeting took place on the eve of the Thanksgiving holiday in the US, which is traditionally the beginning of the biggest diamond jewellery buying spree in the world.

The "town hall" meeting heard that  South African diamond industry also needed to begin promoting diamond jewellery during the soccer World Cup, which begins on June 11.

Coming in for particular criticism was South Africa's new State Diamond Trader system, which was seen at the "town hall" meeting as a major stumbling block.

Wanted back is the disbanded Diamdel, which once underpinned business of $100-million a year in local diamond trading.

Diamdel was absorbed by the State Diamond Trader system, which several speakers from the floor condemned as an abject failure.

The system permits the South African government to buy 10% of the diamonds produced in the country and is meant to foster diamond cutting and polishing and general value addition in South Africa.

United Diamond Association of South Africa spokesperson Ernest Malakwane complained that the diamond industry had not been consulted about the handing over of the De Beers-owned Diamdel to the State Diamond Trader. He said that the environment was better when Diamdel was still operating.

"We would be happy to look at putting in a structure that the industry, ourselves and the government found to be appropriate," Penny replied.

Temane said that the South African diamond industry itself was to blame for its many woes: "The fault lies with us. We are not united. We are a divided flop. For as long as we remain so, we are going to get regulation after regulation after regulation.

"Until we get our own house in order, we will have government in our business, from top to bottom. What I suggest is that we unite, and put South Africa first," he added, to applause.

Penny responded that the South African government would listen to the diamond industry if it spoke with one voice.

"We've got some very big challenges. The rand-dollar exchange rate is not going to go away very quickly. The dollar is going to be weak for a long time. We need to come back together in the New Year with solutions. Let's work together and talk collectively with government.

"We've got a World Cup coming up that we can take advantage of, and we've got an opportunity to put South Africa on the map," Penny added, also to applause.

On the global industry, Penny said that, although it had improved significantly since the collapse of 2008, it was still well off pre-crash levels.

"The one confidence that we can take is that, as we come out of the recession, we will see a very, very strong return to the health of the industry," Penny said.

De Beers and US diamond retailers have financed the new Love Knot diamond advertising campaign, which is expected to boost diamond sales during the Thanksgiving to Christmas period.

Launched on Wednesday night, the campaign was seen at the "town hall" meeting in Johannesburg a few hours ahead of US audiences.

It is estimated that 100 million Americans will see the advertisement, which features a song that one in ten American brides is said to choose as the song to dance to immediately after the wedding ceremony.

While gross domestic product growth was returning  in various parts of the world, the spectre of unemployment remained, which Penny cited as an inhibiting factor.

"There are still many millions of people out of work in America and in many other parts of the world. Things are certainly better than they were, but our view is that we have quite a long way to go before we're out of the woods," Penny cautioned.

The prices of polished stones are not rising and the downstream industry's disquit around the rise in the price of rough stones was apparent at the meeting. The rise in the price of rough against a static polished price is said to be the result of the gap between rough and polished still being considerably wider than what it was before the crash.

Penny said that most of De Beers' mines had been reopened, with the exception of Namaqualand in South Africa. Some mines were still operating only on two shifts, however.

In Botswana, operations at the two big mines, Orapa and Jwaneng, had resumed, and only the small Damtshaa mine remained closed. Production was also under way in Namibia and Canada.

"We are probably now at 80% of our total mining capacity," he said.

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