Diamond woes: blame it on poor legislation

Ilan Kaplan

The relocation two years ago, by DeBeers of all their rough diamond sorting and trading functions from London to Gaborone was brought about by an agreement signed between De Beers and the Government of Botswana and has absolutely nothing to do with South Africa.

Furthermore, it had very little impact on the diamond cutting and polishing landscape in South Africa. If anything, it added more foot traffic to South African shores. Some diamond businesses operating in South Africa opened additional offices and factories in Botswana, which allowed these companies to leverage off existing economies of scale which were already present in their local operations.

Not one factory shut down completely in South Africa only to open in Botswana instead.

Slier refers to “The State Diamond Company” and “The State Government Company”. I guess the entity name he is referring to is that of The State Diamond Trader, the SDT.

Slier claims that as a result of the relocation of De Beers to Botswana “there was no longer a single South African sightholder”. This is not true. There are currently eight South African sightholders who have active agreements with De Beers to purchase rough diamonds 10 times a year in Kimberley.

Yes, local players do have to compete with international buyers at private tenders as well, but this is not what has caused the dramatic loss of jobs in the local diamond and cutting industry. Ultimately there is a natural place for South Africa among the leading cutting and polishing sectors of the world and what is hindering the sustainability of this industry going forward is simply poorly planned and executed government legislation together with an overly regulated local business environment.

Should the South African government decide to open up the industry and let free economic factors take over, the future sustainability of the industry in South Africa would not be in question.

 Vice-Chairman – South African Diamond Manufacturers Association

Our letter writer berates Lionel Slier, but then admits to the “dramatic loss of jobs in the local diamond and cutting industry”. Blaming poor government legislation and policy may be the overriding reason, but fact is the industry is but a faint shadow of what it used to be. That is the gist of Slier’s article. – Editor