South Africa's government is intervening in the international diamond market to ensure that uncut stones are polished by local jewelers. The government will soon begin buying 10 percent of the country's raw diamond output to help its domestic cutting industry grow. Terry FitzPatrick reports for VOA News.
South Africa is the world's fourth-biggest diamond mining country, generating $1.4 billion in uncut stones each year. But fewer than 3,000 people work in processing factories, where half the value of finished diamonds is created by cutting and polishing the stones.
It has been especially hard for black cutters to enter the market, even though racial apartheid has ended. That is because most raw diamonds are exported, and those that remain are spoken-for under long-standing contracts with South African mines.
The South African government will soon restrict diamond exports. During a ceremony Monday at Parliament, officials unveiled details of a new state-owned diamond trading house. By law, it will have access to 10 percent of the nation's raw stones.
Minerals and Energy Minister Buyelwa Sonjica says the government will sell these diamonds to small and medium sized jewelers, to keep the profits from polishing at home.
"This is going to make beneficiation a reality in South Africa because there will be minerals that are available," said Sonjica. "It is quite exciting, the process of making diamonds accessible to people who did not necessarily participate in this area."
The world's biggest diamond company, South-Africa based DeBeers, will donate equipment, offices and personnel to get the government trading facility running by January 1. DeBeers initially opposed diamond-export restrictions, but Director Barend Petersen says his company is happy to promote racial diversification.
"This is a great day in the history of the diamond industry in South Africa," said Petersen. "DeBeers are fully supportive to transformation. It is another step on a journey. We believe that this is a good day for the country, for the economy, and generally for cooperation."
South Africa will buy up to $140 million in uncut stones each year, and sell them to local jewelers at market price. The government says this will ensure a stable supply of raw diamonds, and talks are underway about government loans so that small factories can buy the stones.
If the state trading house is successful, Minister Sonjica says it will set an example for South Africa's other big mineral exports like gold, platinum and uranium.