Diamond industry not out of the woods
Brian Benza | Wednesday November 9, 2016 15:51
Speaking during the De Beers Diamond Conference 2016 held in Gaborone, Molefhi said government has taken some initiatives which they hope will bring back viability to the sector.
“Some of the initiatives geared towards improving the business environment are the minerals policy review and regular engagement with stakeholders. I believe, the deliberations, and interactions at this conference will empower participants in ways that will motivate and empower them to sustain a living and thriving diamond industry into the future,” he said.
Due to depressed polishing prices set against high rough prices, cutting and polishing companies globally faced severe difficulties last year with the local industry’s situation exacerbated by the comparatively higher labour costs. This led to about 1,500 job losses in Botswana last year.
Giving the keynote address at the conference, vice president Mokgweetsi Masisi said Botswana is committed to establishing an enabling and safe environment for investors in the diamond sector.
There are 20 operating diamond cutting and polishing companies in Botswana.
“I wish to assure you that your investment in Botswana is and will always be safe. We have had problems with diamond cutting and polishing companies being affected by price mismatches as well as shortages of requisite skills. But manufacturers and retailers should work together to ensure the sustainability of the industry,” he said.
Although the mismatch between rough and polished prices has subsided this year, local cutters and polishers still complain about lack of viability of factories here. Investors in the diamond industry say factors that largely contribute to viability concerns include poor work ethic, legislative constraints and expensive but unskilled manpower in Botswana.
High labour costs in Botswana’s fledging diamond cutting and polishing industry have always been perceived as a possible threat to the beneficiation efforts, as it renders local polished diamonds uncompetitive on the global market.
It is estimated that diamond cutting costs $12 to $25 per carat in India, $20 to $30 in China while in Botswana it costs between $60 and $65 per carat.
“Rough prices have come down this year while on the other hand polished prices have firmed. This has relieved pressure on the local manufacturers but the industry is still far from being viable.
I think it’s still the same old story here, international investors are prepared to keep their loss making factories open here so they can secure rough supply from De Beers for their international operations, which are more profitable,” said an official with a local cutting and polishing firm.
The two-day diamond conference, which ends today, is being held under the theme, “Beyond Tomorrow - Preparing the Diamond Sector for the Future.”
The primary objective of the inaugural conference is to cultivate a platform for engagement on key business issues impacting the diamond value chain.
The conference is focusing on innovation, driving consumer confidence and attaining sustainable public private partnerships within the diamond industry. The conference brought together expert delegates representing stakeholders from various faucets of the diamond industry to debate issues and explore future strategies.