Beneficiation core to De Beers business model

Beneficiation is strategic in extending benefits of diamond mining to producer partner countries

In implementing sustainable beneficiation, De Beers is aligning its strategy to government’s imperatives of sustainable growth and employment in the downstream diamond industry in South Africa.

The company’s strategic beneficiation objective is to “implement initiatives that are aligned and are confirmed by government to be supporting it in addressing some or all of the inhibitors for achieving its beneficiation objectives”.

The South African beneficiation diamond sector, which includes rough diamond cutting and polishing and jewellery design and manufacture has experienced a number of challenges. A concerted effort is needed to revive the sector in partnership with industry, organisations and government.

In playing its part to address the challenges in the sector, De Beers is focusing its efforts on training and development, supplying rough diamonds for local cutting and polishing and facilitating jewellery design and manufacture. In 1999, working in partnership with the Diamond Manufacturers Association of South Africa, De Beers established the Harry Oppenheimer Diamond Training School. Today the school is an internationally recognised educational institution, providing specialised training in diamond cutting and polishing and in rough diamond evaluation.

Following on this success, in 2011 the company, in partnership with the Northern Cape provincial government, launched the Kimberley International Diamond and Jewellery Academy (Kidja) in Kimberley, the birthplace of De Beers. Since inception Kidja has trained 440 students, 70 of whom live with disabilities. In addition, De Beers provides bursaries each year to disadvantaged learners who register at Kidja for diamond cutting and polishing and rough valuation courses. Providing a consistent supply of rough diamonds to its clients — known as Sightholders — has been core to ensuring the sustainability of local cutting and polishing factories and maintaining jobs within the local beneficiation sector. Sightholders employ approximately 80% of the cutters and polishers in South Africa.

In 2015, De Beers introduced a new customer category: Accredited Buyers. This created an opportunity for beneficiators who are not yet Sightholders to access rough diamonds from De Beers on an ad-hoc basis. In time, upon complying with our client selection criteria, Accredited Buyers may develop their businesses and qualify to become Sightholders.

With democracy beckoning in South Africa and with the focus on transformation emerging, De Beers took the initiative to establish Diamdel in 1986. This provided rough diamonds to 106 cutting and polishing businesses, 33% owned by historically disadvantaged South Africans (HDSAs) clients, who were not De Beers Sightholders, in 2005. Diamdel ceased to operate in 2007 when government, as part of the enactment of the Diamond Amendment Act, established the State Diamond Trader (“SDT”).

The company continues to offer 10% of South African production for sale to the SDT as per legislative requirements. The production supplied to the SDT is important for the continued supply of rough diamonds to the local secondary beneficiation industry. To facilitate the entrance of new players into the jewellery sector, De Beers launched the Shining Light Jewellery Awards in 1996. The Awards, which were originally for South African designers only, are held every two years and on average, attract 400 entrants per competition. The Awards are open to current students, as well as those who have completed their studies at a tertiary institution in the past two years.

Some of the jewellery that has been manufactured as part of this programme has been showcased at the Oscars in the USA, China and the United Kingdom. In 2013, Hunadi Tlomatsana, the 2012 Shining Light Awards competition overall winner, was awarded a merit award in recognition of her design ability by the International Jewellery Design Excellence at the Hong Kong Show, coming tops from 187 entries across 28 countries.

Considering their success, the Awards have also been launched in Namibia and Botswana in 2008, and further adapted into one regional competition in 2015.

The Awards are also focused on creating an international platform for showcasing local talent, and through the partnership with Forevermark, the De Beers international jewellery brand, young designers are best able to gain access to the global diamond jewellery market. The 2015 overall winner, Lilja Hastie from the Tshwane University of Technology, has been offered a year’s training scholarship with De Beers Group’s Forevermark design team in Milan, Italy.

Some of the previous winners of the Awards have secured employment with international jewellery manufacturing houses, others have established their businesses locally and internationally, and with others lecturing at various tertiary institutions across South Africa. Over the years, De Beers Sightholders have made significant strides in ensuring the empowerment of their local diamond cutting and polishing businesses.

Through its De Beers Zimele Enterprise Development initiative, the company has made considerable progress to support, through funding and mentorship, small business development. Since being launched in 2009, De Beers Zimele has created about 2970 jobs, funding about 265 enterprises and with loans approved amounting to R82.5 million.

To build on this success, and in an effort to address some of the challenges of facilitating local diamond beneficiation, De Beers embarked on a project to further contribute to the transformation and growth of the diamond cutting and polishing sector in South Africa, based on the principles of enterprise development.

The project was launched by the Deputy Minister of Mineral Resources, Mr. Godfrey Oliphant, in 2015, following the selection of five HDSAs Beneficiation Project Members (“BPMs”), three of whom are female. The three-year pilot project provides a holistic development approach from rough diamond purchase, cutting and polishing, marketing and distribution of polished diamonds.

Over and above the technical and industry knowledge mentorship programme provided in partnership with Sightholders and the business skills and entrepreneurial development through a business development consultant, De Beers also provides rough diamond to non-De Beers Sightholders, through the BPMs.

Encouraging is that all BPMs have graduated from the first year of their business development programme, recording an average 96% increase in turnover and 53% increase in employment.

It is De Beers’ ultimate ambition that the BPMs will, in future, qualify as Sightholders and in this regard, has ensured that they manage their businesses in-line with Sightholder status requirements while they part of the project. Creating an enabling environment for beneficiation to succeed is critical, especially for a sector that competes on an international stage. The Gauteng government, through the Gauteng Industrial Development Zone (“GIDZ”), has taken this on board and is establishing a Jewellery Manufacturing Precinct (“JMP”) at the OR Tambo Industrial Development Zone, which will include both local and international beneficiators, establishing an export orientated growth sector.

De Beers with its global footprint, international experience and partners across the diamond pipeline, has established a formal partnership with the GIDZ for the establishment of the JMP.

Once established, the JMP will, amongst others, reduce the cost of doing business for beneficiators, provide business support and implement skills development programmes in the jewellery manufacture and diamond beneficiation sectors.