The Sunday Mail
On November 6 and 7, the Ministry of Mines and Mining Development and diamond industry stakeholders hosted the second edition of the Zimbabwe Diamond Conference in Harare. Value-addition and beneficiation dominated the conference, especially as President Mugabe advocated immediate implementation of diamond value-addition strategies. Our Senior Reporter Kuda Bwititi spoke to World Diamond Council Honorary President Mr Eli Izakoff and Mr Mmetla Masire, a co-ordinator at Botswana’s Diamond Technology Park, who were among scores of international diamond industry players at the conference. Mr Izakoff and Mr Masire spoke on how Zimbabwe can fully benefit from its diamonds. We publish excerpts of that conversation below.
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Eli Izakoff
Zimbabwe is still a very young nation in the diamond industry, but it has come a long way. I am impressed that your mining operations are transparent and there are not many problems unlike in other African countries where diamonds are a source of conflict.
You don’t hear of people dying here in Zimbabwe because of diamonds. So, you deserve credit for organising your sector so that there is order. This is very important.
I was very happy that you are now talking about consolidating your diamond industry. That it very good. The fact that you are talking about the industry is very positive. Your country will benefit a lot from beneficiation because your people will get jobs and your economy will grow, with time.
What Zimbabwe needs to understand is that it takes time to achieve results from beneficiation of diamonds. You can look at Israel and China as examples.
It took time for these countries to establish their diamond industries. So, Zimbabwe has to be patient. However, you should start beneficiation now; you have to implement it now and not just to talk about it.
The results will not be immediate because, for example, you need the expertise, that experience is important. In a few years’ time, you will get the benefits.
How to learn to do it takes time. It requires experience. But you have to start somewhere. That is why it is important that you start now.
There has to be investment in education at a very large scale. Teach your people how to cut and polish the diamonds. It is a process. It is not easy, but you have to start. Once you start, things will happen.
You have done well to have achieved KPCS (Kimberley Process Certification Scheme) certification and you now have the respect of members. Beneficiation of your diamonds is naturally the next step that you should take. As Zimbabwe, you have the potential to do great things in the diamond industry. That’s why you have attracted so many people in the diamond industry. What you need to do is to get all these people now; to get lessons from all these international players; because they are keen to help you.
Zimbabwe is a young nation in diamonds, but it is becoming a global player and everyone is always eager to know what Zimbabwe is doing with its diamonds.
I have served on diamond boards in New York, Panama, Bangkok and many others so I can see the potential that you have when I compare you with all these other countries. I think if you implement the right things, your centre will be able to match other centres such as Antwerp, or Dubai.
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Mmetla Masire
Zimbabwe has to determine beneficiation in the Zimbabwean context. It should determine what it needs to focus on in the value chain. There are three stages of beneficiation. The first one is cutting and polishing. Then there is the jewellery industry as well as the retail industry.
You have to understand that the cutting and polishing industry has low margins of profit. More money is made by jewellers and retailers. For example, jewellers make profit margins of about 25 percent, while retailers make margins of above 25 percent.
But, because you have the supply, it is easier for you to go into cutting and polishing. The profit margins may be low, but you will maximise on volumes.
For cutting and polishing, the margins are between three to seven percent. So, because of these low margins, profit is made through volumes. If you want to be serious about cutting and polishing, you should have a policy to supply high volumes to your industry. This will also help you to create more jobs and keep the workers busy. I think it will be a good idea for your people to come on a technical visit to Botswana so that you see what we are doing and make sure that you do not make the same mistakes that we made when we started our cutting and polishing industry.
What is most important is that there should be enough supply for the local market for your cutting and polishing industry to succeed; so that your local factories have sufficient quantities. You should make sure there are clear cutting and polishing training programmes. You should also make sure diamonds, which are supplied to these factories, are “polishable” and “cuttable”.
It will be of no use to supply diamonds that cannot be utilised for the purpose that you seek to achieve. When we started our diamond industry in Botswana in 1981, supply was the biggest challenge. One important lesson is that not all diamonds are valuable. But Botswana makes sure that all the diamonds that are cut and polished are valuable.
You cannot copy Botswana’s model; you have to come up with your own model. What you can only do is to take lessons and not to copy everything.
For example, a rough estimation is that in Botswana, 95 percent of diamonds are gems, but here in Zimbabwe, the percentage of gems is very low and, in some instances, it can be as low as five percent for a parcel of diamonds.
In Botswana, about US$800 million of diamonds go through the local chain.
This is a sixth, or about 20 percent of our total industry, which is worth about US$6 billion annually. So, our local cutting and polishing industry accounts for 20 percent of the entire sector. In Botswana, there are 21 companies in our diamond hub and 3 500 people are employed in this set-up.
If you look at South Africa, it had problems with its diamond industry because of its run of mine. This is the truth that Zimbabwe should face. You should have a policy which says that a certain percentage of your diamonds in a certain range should be used for cutting and polishing and not all the diamonds; because not all diamonds are cuttable.
Basically, there has to be a mechanism that you can use for cutting and polishing. You can also learn important lessons from India.
Eighty percent of all the world’s diamonds are processed in India. Then, on the other hand, the best diamonds in the world go to the United States and Belgium.
