A storm is brewing between government and small diamond cutters and polishers over a reported lack of supply of the gems because of slow progress by the State in its efforts to boost beneficiation of diamonds in South Africa.

Department of Minerals and Energy director-general Sandile Nogxina said on Tuesday that the State Diamond Trader (SDT), which government was setting up with the help of diamond giant De Beers, was not yet operational and that there “is no crisis in the South African diamond industry”.

Speaking in an interview in Carletonville, he said that the alleged crisis was a “figment of imagination”, referring to a media report on Monday.

However, a frustrated United Diamond Association of South Africa (Udasa) chairperson Ernest Malakoane argued that there was a desperate shortage of diamonds for small cutters and polishers, which was forcing them to close shop.

“The government said the SDT would start supplying diamonds on August 1, but now they talk of this happening only next year,” stated he. “The factories at the Johannesburg diamond centre are not working because they do not have diamond supplies.”

Speaking in a telephone interview, he went on to argue that the SDT had not yet consulted with Udasa, which represents smaller cutting and polishing companies, as well as new industry entrants.

However, Nogxina was quick to point out that the trader, which would buy gems from miners in the country and distribute them to cutters and polishers, was still being set up.

“The crisis is said to be emanating from the SDT being worse in terms of making diamonds available to cutters and polishers,” he stated. “Nothing could be further from the truth.”

“The crux of the matter is that the SDT has just appointed the CEO and the board was appointed about one month ago,” Nogxina added.

Diamonds still available – De Beers

De Beers’ trading arm, the Diamond Trading Company (DTC), said that it was still indirectly supplying diamonds to small cutters and polishers.

“De Beers continues to supply Diamdel with diamonds for sale to the smaller local cutting companies as an interim measure while the SDT is established by government,” DTC South Africa MD Faried Sallie said in an emailed statement.

“Obviously the company is also supplying its major clients in South Africa, known as sightholders, on a regular basis.”

However, Malakoane argued that Diamdel had its “preferred” customers and did not supply to the rest.

Malakoane extended an invitation to Nogxina to visit the diamond centre to assess the situation.

SDT has top people

Sallie went on to say that the diamond cutting industry had “some of the internationally, let alone locally, most respected industry people serving in the SDT”.

“We note that various senior appointments to the SDT have been announced in the past month and De Beers has already committed itself to giving the new body its assistance in getting it off the ground,” stated Sallie.

Nogxina said that its newly appointed CEO Abbey Chikane was recruiting management and other officials, and that the SDT would probably be operational before the year-end.

Partnership

On February 9, President Thabo Mbeki announced that De Beers would help government set up the SDT, which would buy 10% of all the diamonds produced in South Africa, and distribute them to local cutters and polishers.

De Beers said that it would make its management, technical expertise and assets available to the DME for the next three years to facilitate the start up of the SDT.

The partnership was hailed by both the DME and De Beers as a positive move for the diamond industry in South Africa.

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