Small diamond players lash state trader for job losses and business failures
August 24, 2009
By Justin Brown
The government and the State Diamond Trader (SDT) have come under attack once again for policies that have caused job losses and led to business failures in the diamond manufacturing sector.
This time the criticism has come from Ernest Malakoane, the chairman of the United Diamond Council of SA, a body which represents 150 black-owned gem cutting and polishing businesses.
Malakoane said small diamond diggers in the Northern Cape and the North West had been put out of business, and he attributed this to new state licensing regulations, including requirements to take on empowerment partners.
The collapse of this industry meant that small diamond processors could not get the precious stones. Malakoane called for the return to the old way of licensing, which he said would enable diggers to get back into business.
However, Futhi Zikalala, the acting chief executive of the SDT, rejected Malakoane's claims that the organisation was responsible for any job losses in the sector.
She said Malakoane needed to acknowledge that the global recession had badly affected the local diamond industry.
Department of Minerals and Energy spokesman Jeremy Michaels was unable to comment on these accusations.
Malakoane said he had invited Mining Minister Susan Shabangu to attend a meeting of "concerned members of the diamond industry" to be held tomorrow "in order to gain first-hand knowledge of the problems facing the industry".
Michaels was not able to say whether Shabangu would be attending the meeting.
Malakoane also criticised the management team of the SDT for having "no idea what they were doing". He singled out Zikalala for not knowing anything about diamonds.
However, Zikalala said the SDT had technical skills in the form of six people seconded from De Beers for three years until November next year.
Malakoane also criticised the inclusion of De Beers in the state trader. "De Beers will always undermine the SDT as it did not want the trader to exist," he argued.
The SDT was not supplying diamonds any more and was "shut" to smaller players, Malakoane added.
Zikalala denied that the SDT was no longer supplying diamonds. In July the SDT provided 80 000 carats of diamonds to four or five local companies, she reported.
In 2007 local diamond output was 15 million carats. The SDT has about 105 clients on its books, including Malakoane's Ma-Afrika Diamonds.
Ernest Blom, the chairman of the Diamond Council of South Africa, said the SDT was not supplying the small diamond players that it had been intending to supply.
The amount of diamonds bought from local diamond mines since last year still remains unclear.
George Zacharias, the Trans Hex company secretary, said that the SDT had not bought any of the company's diamonds. However, spokespeople for De Beers and Petra Diamonds confirmed that their companies had sold diamonds to the SDT.
Malakoane said the SDT had struggled to acquire diamonds because it bought the stones direct from local mines, had failed to reject unviable stones and had also experienced financial problems.
But Zikalala denied this, saying that the SDT had a R60 million loan facility from the Industrial Development Corporation.
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