The di­a­mond value chain

Finweek English Edition - - Finweek -

THE NA­TURE OF MIN­ING means re­sources are non-re­new­able and, as a re­sult, De Beers is con­stantly work­ing to en­sure fu­ture re­serves for min­ing. In do­ing so it un­der­takes its own prospect­ing and it part­ners with more than a dozen ex­plo­ration com­pa­nies, in­tro­duc­ing new tech­nolo­gies and ways to ex­plore and to ac­cu­rately de­ter­mine the vi­a­bil­ity of dozens of de­posits it dis­cov­ers each year.

As his­tory has shown, ma­jor di­a­mond mines are rare dis­cov­er­ies and once its re­serves have been proved and a bank­able fea­si­bil­ity study con­ducted, the com­pany can move to­wards pro­duc­tion, as has been seen at its Voor­spoed Mine. In ad­di­tion, De Beers has re­cently in­vested R1,1bn in its marine min­ing project us­ing the ves­sel Peace in Africa off South Africa’s At­lantic coast­line – this coun­try’s first deep-wa­ter, full-scale sea min­ing op­er­a­tion.

Once the di­a­monds have been mined they have to be sorted and dis­trib­uted. That takes place in DTC SA in Kim­ber­ley and at De Beers in Lon­don and at the ex­pand­ing Gaboronebased Di­a­mond Trad­ing Com­pany (DTC). De Beers dis­trib­utes rough di­a­monds, sell­ing to 78 lead­ing cut­ters who will sell the gems to jew­ellery man­u­fac­tur­ers who will be re­spon­si­ble for craft­ing the end prod­uct.

In line with ef­fi­ciency and Gov­ern­ment’s ben­e­fi­ci­a­tion ob­jec­tives, the DTC’s sort­ing, valu­ing and sales op­er­a­tions in SA have now been merged into one of­fice in Kim­ber­ley to cre­ate DTC SA. Gov­ern­ment has set up a di­a­mond trad­ing op­er­a­tion for smaller scale cut­ters, known as the State Di­a­mond Trader. De Beers worked with Gov­ern­ment to help es­tab­lish the ven­ture and now most min­ing com­pa­nies pro­duc­ing di­a­monds in SA of­fer up to 10% of their pro­duc­tion to that body at a mar­ket- re­lated price.

Gov­ern­ment hopes to boost SA’s cut­ting and pol­ish­ing in­dus­try by en­sur­ing the avail­abil­ity of qual­ity gems and to date De Beers is the only com­pany to have fully com­plied, though other sup­pli­ers are now com­ing on stream. Around 40% of De Beers’ pro­duc­tion in SA is sold to the lo­cal cut­ting in­dus­try: those sales are worth US$650m. Through ini­tia­tives such as the Harry Op­pen­heimer Di­a­mond Train­ing School, De Beers is fa­cil­i­tat­ing cut­ting and pol­ish­ing skills re­quired in the in­dus­try. The pos­si­bil­ity of es­tab­lish­ing an in­ter­na­tional di­a­mond and jew­ellery academy is also be­ing ex­plored by the DTC with the North­ern Cape pro­vin­cial gov­ern­ment.

For more than 10 years the DTC has run the Shin­ing Light Awards com­pe­ti­tion to en­cour­age and de­velop SA’s jew­ellery de­sign tal­ent, as well as cre­ate op­por­tu­ni­ties for skills de­vel­op­ment and job cre­ation for all South Africans. Since the awards be­gan there have been more than 90 win­ners.

Mar­ket­ing is car­ried out by De Beers Group Mar­ket­ing (DBGM), a sep­a­rate busi­ness unit within the com­pany with some ac­tiv­ity in the SA mar­ket. DBGM will con­tinue to fo­cus on three core ac­tiv­i­ties: de­vel­op­ing and mar­ket­ing “big ideas,” such as the Tril­ogy pro­gramme, which has proved so suc­cess­ful at driv­ing de­mand; fur­ther de­vel­op­ing the Forever­mark pro­gramme, a branded di­a­mond con­cept; and main­tain­ing con­sumer con­fi­dence in di­a­monds.

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