South Africa, through diamond company De Beers, invested heavily in the marketing of diamonds. The slogan ‘A Diamond is Forever’, according to Advertising Age, is the most recognised slogan of the twentieth century, with 90% of all Americans familiar with it, and De Beers having used it since 1948.
But, because of lack of insight by South Africa’s errant Department of Mineral Resources (DMR), South Africa is no longer a signifi- cant beneficiary of the huge investment that the country made in diamonds.
South Africa’s diamond output has been needlessly curtailed by the DMR standing in the way of attempts to explore for more diamonds using new technology that can spot a sparkle where old technology could not.
Because of this economy-smashing DMR behaviour, South Africa is losing out on the colossal investment in diamond marketing – and the rest of the diamond world is eating our lunch.
The same thing could well happen with platinum, in which South Africa has again invested a colossal amount of money in marketing, but which could end up being lost because of the absence of local insight.
The South African platinum industry has been investing in platinum jewellery for more than 45 years through the Platinum Guild International (PGI), which has turned platinum jewellery into an amazing South African asset.
Since 2001, investment of $800-million in platinum jewellery demand has created 35.5-million jewellery ounces, worth $7.3-billion, but, given the huge opportunities, far more demand could be generated with greater investment.
In China alone, people buy 12-million pieces of platinum jewellery a year. Currently, the China business is roughly 1.5-million ounces net demand each year, and PGI calculates that ongoing marketing could generate demand for at least another 3.5-million ounces.
In India, where demand is growing at a rate of 25% to 30%, PGI sees potential for at least 2 000 to 3 000 more stores.
Conversion into platinum in the US of only the heads that hold the diamonds on engagement rings would generate another incremental 150 000 oz of demand.
Japan continues to have the highest per capita consumption of platinum jewellery, with over 50% of total jewellery sales value stemming from platinum jewellery alone.
All this has been done through the investment of hard-earned South African money and now is the time for South Africa Inc to step back and look at the great value it has in brand platinum and to examine the upside potential of greater investment.
The platinum business is desperate for demand growth to sustain the livelihoods of millions of South Africans.
But, as has happened with diamonds, northern hemisphere producers will increasingly reap the benefit of the billions of dollars that South Africa has sunk into the development of the platinum jewellery business.
The eating of our platinum lunch could also soon spread to the southern hemisphere, where the Pedra Branca platinum project of Jangada Mines has snapped up the $35-million investment that South Africans have walked away from in Brazil.