Jewel City hints at diamond industry challenges

Posted On Monday, 16 April 2012 02:00 Published by
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Aptly named Jewel City, the precinct houses the South African Diamond and Precious Metals Regulator and the State Diamond Trader

Shrouded in mystery, buried deep in Johannesburg's central business district, sits the hub of the local diamond industry.

Housing diamond dealers, manufacturers and traders, understandably one of the most attractive features of Jewel City for the tenants is the high level of security.

And one of the precinct's major tenants, who operates the South African arm of an international diamond-trading company and preferred to remain anonymous, appreciates the security measures as he usually has millions worth of stock on site.

When Business Times arrived at his store, he was working on a rough diamond he estimated was worth $350000 (R2.7-million).

He said he also had a sophisticated system to track where all of his diamonds were at a particular point in the production line.

In the precinct, many high-visibility security guards carefully watch the 1500 to 3000 people who go through the precinct every day.

Every entrance to the precinct has a security barrier. On most entrances, there is the added complication of fingerprint recognition software.

The R200-million property is part of Redefine Properties' portfolio. According to Iain Nickel, an asset manager at Redefine, security is an essential part of the service.

To bulk up the security offering, Redefine is working on providing tenants with the option of flying diamonds to and from the airport by helicopter.

The South African Diamond and Precious Metals Regulator and the State Diamond Trader are both meant to play a significant role in beneficiation in the diamond industry, while the latter's primary purpose is to secure the supply and equitable access to rough diamonds.

Some of the tenants did, however, paint a bleak picture for diamond beneficiation in South Africa.

"It's been tough for the diamond cutters and polishers because De Beers has sold a lot of mines and so there are less volumes available," said one tenant.

"I have an agreement with De Beers, and with the mine sales the allocation of minerals has drastically shrunk.

"This has forced us to cut costs. In the past four years, my workforce has gone from 300 to just 60," said the tenant.

Automatic machines that were supposed to be cutting and polishing were sitting idle.

He said he sometimes had to import diamonds from countries such as Namibia, Botswana and Zimbabawe just to keep business going.

"But jobs are also lost to cheaper labour that is available elsewhere, in India and China. Labour greatly impacts the price of the diamonds," he said.

This tenant exports all of his polished diamonds to Belgium.

The government charges a 10% levy on all rough diamonds exports, to encourage beneficiation in South Africa.

Nickel cited competition from Botswana and India as well as the lack of free flow of diamonds in the country among the challenges for the country's dwindling beneficiation sector.

"Beneficiation is critical, and we do a lot of work with the diamond regulator and the unions because there has been a lot of retrenchment of highly skilled labourers in the industry," Nickel said.


Publisher: BT
Source: I-Net Bridge

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