Hitherto, the organisation has bought about R118-million worth of diamonds, predominantly from mining giant De Beers, which is a meagre 3%, with about 104 local cutters and polishers benefiting from this.

“We are not happy with this,” Chikane tells Mining Weekly.

“We would like to move more speedily to achieve 10% of our total production to sell to our clients, and hope to achieve this at the end of this financial year,” he adds.

The SDT’s financial year ends in March.

The SDT is waiting for approval from the National Treasury to increase its borrowing power from the current R35-million, to a R100-million a cycle, and Chikane says he is optimistic that its request will be granted, enabling it to accelerate its progress.

While the company’s business model is described as “solid”, the challenge remains the concept of the run-of-mine that is regulated by the Diamond Act, says Chikane.

“Not every diamond that is produced in South Africa is necessarily desirable, and we have yet to come up with a solu-tion to this problem. “We also need to identify cutters and polishers that have the requisite know- how to cut diamonds that are minus three grainers and are the part of the representative sample that we buy from producers,” he adds.
Also slowing down the SDT is the signing up of more producers. Negotiations between the SDT and producers, which should have been concluded at the end of June, are still under way. Chikane says that the SDT is working towards the finalisation of the diamond supply agreements “as soon as possible”.

He says, “In the debate on beneficia-tion, and when the legislation was drafted, I believe we raised high expect-ations. “There was a perception created that there was going to be a flood of diamonds in the market, and the truth is that we only produce up to $1,5-billion worth of goods a year, and the SDT is regulated to buy up to 10% of that value, which is $150-million.”

World Federation of Diamond Bourses life president Ernie Blom tells Mining Weekly that the diamond industry in South Africa and, in particular, the ben-eficiation aspect, are going through a difficult time currently, mainly owing to a lack of a constant and sustainable supply of rough diamonds.

Chikane says that there are not enough diamonds in the market place and these diamonds are “not and will never be” sufficient for South African cutters and polishers.

Phemelo Sehunelo, CEO of Pikwane Diamonds, the Northern Cape’s largest black-owned diamond-mining company, tells Mining Weekly that the current diamond pipeline is “stuffed”, making it a difficult market for the SDT to operate in.

“We welcome the SDT, and are mindful that any new project will encounter delays and challenges and that processes can take long. It is more difficult for the SDT, given the conditions of the market that it operates in,” says Sehunelo.

Pikwane Diamonds is currently in negotiations with the SDT, with a view to supplying rough diamonds to the new State body.

“The SDT is ideally positioned to fulfil its role, which it must do speedily and as soon as possible. “The vision of the Ministry, which is a noble one, can only be realised if the supply chain problems are addressed,” says Blom.

Diamond company De Beers chairperson Nicky Oppenhiemer says, “From our perspective, we very much hope that the SDT becomes a very successful operation and is able to help smaller people in South Africa get into the diamond-cutting business.”

Diamond Council of South Africa CEO Braen Migogo tells Mining Weekly that it is “premature” to assess the success of the SDT, in light of the fact that it is a new entity that has just completed its pilot phase. The expectations of the industry, and the reality of the current performance of the SDT have to be reconciled.

The harsh reality, says Migogo, is that there now is a delivery expectation for the SDT to respond to the urgent needs of the industry to make the diamonds available, particularly to small players.

Migogo points out that the price and profile of the rough diamonds offered by the SDT make it difficult for emerging diamond entrepreneurs to gain access to the diamonds.

“In principle, the SDT is a sound mechanism, but, in practice, the reality is that there are challenges, and, if the SDT has the capacity to handle and address these, then there is every reason to be optimistic. If, however, the SDT does not have the capacity, it will fail to achieve its object, to promote equitable access to rough diamonds aimed at supporting local beneficiation. This will have a negative impact on the sustainability of the beneficiation industry,” concludes Migogo.

The SDT plans, at some point, to increase the 10% mandated by government, by buying diamonds from other African countries.