World Federation of Diamond Bourses president Ernie Blom has called on Mineral Resources Minister Gwede Mantashe, through an open letter, to put into practice what government has said regarding the development of the South African mining industry, in general, and to help “pave the road to success”.
In particular, Blom referred to the global diamond sector, which he said “flourished when close cooperation between government and industry prevails”.
It is for this reason that Blom, and other industry leaders, have offered their assistance to the Minister and the Department of Mineral Resources to draw up a strategy and assist with its implementation to ensure “a better future for all in South Africa”.
He further emphasised that there was a dire need for the industry and government to reach out to one another and work with all stakeholders to develop the diamond and jewellery industry and, in so doing, create employment as well as expertise and contribute to the country’s wellbeing.
In turn, this would reverse the downward spiral of the industry, Blom said.
He further referred to Mantashe’s opening address as this year’s Investing in African Mining Indaba, held in Cape Town, during which the Minister referred to the South African Diamond and Precious Metals Regulator, stating that the main concern raised by the industry was the red tape associated with the processing of operating licences.
According to the Minister, while this is an issue, it is only part of a more comprehensive set of problems that has resulted in the large-scale shrinking of the industry over the past number of years.
In his letter, Blom illustrated several issues plaguing the South African diamond and jewellery industries, some of which include beneficiation, as well as communication between industry and government in terms of policy.
Additionally, Blom lamented the local industry’s disadvantageous trading circumstances, compared with foreign countries that are competing for market share in South Africa.
Related to this, he highlighted that local tax structures favoured importers rather than levelling the playing field, while over-regulation of the industry and the inflow of imported diamonds and jewellery owing to the lack of purity tariffs, contributed to the unwelcome trading environment.
South African diamond miners are also plagued by a lack of access to funding, increasing crime rates and the burden of legal requirements.
Further, Blom believes the diamond industry should not fall under the Mining Charter, debating that “it is vastly different in structure and turnover to the [rest of the] mining industry”.
Related to the challenging operating environment, Blom further penned, is the issue of training quality, the lack of skills transfer, a lack of government involvement in making the industry more competitive on a global scale, a lack of foreign investment, rand volatility, economic and political uncertainty and a lack access to funding for new entrants and smaller operators in the industry.
“We have seen major development from competitors on the international markets where governments are working with industry to develop this sector of the industry. This has led to great success in creating both employment and revenue for the country,” he elaborated, highlighting that the assistance given by government to the diamond and jewellery industries overseas contrasted with a lack of similar help in the South African market, putting the country in a “noncompetitive scenario”.
He elaborated with country examples – such as that of India, China, Korea, Dubai, Israel, Thailand and Turkey – and said that “when governments work with local industry to set a strategy for development, success is almost guaranteed”.
Keeping this in mind, and looking at the road ahead, Blom is of the belief that if government and industry work together to develop a thriving local diamond and jewellery platform, it will “not only create employment, but also . . . financial benefits for South Africa”.
Case studies from across the world could form the basis of a brand new joint strategy for the local market, he said.