February 12, 2008 / 4:50 PM / 12 years ago

Polishing centres to receive less rough diamonds

TEL AVIV, Feb 12 (Reuters) - Major diamond polishing centres will see less supply of rough diamonds in coming years due to efforts by southern African nations to build their own polishing activities, DTC Managing Director Varda Shine said on Tuesday.

“There will be centres that will see less goods in the future,” Shine told a diamond conference in Tel Aviv.

This so-called “beneficiation” process is a move by southern African countries to benefit from mining as well polishing activities.

This is done by encouraging manufacturers from the major world centres to set up polishing plants in southerm Africa, including Botswana and Namibia, transfering technology and skills to these countries and enabling them to reap the full polished price of the diamond.

Shine said smaller rough supply is inevitable since the intention is to divert $1.2 billion of rough diamonds for polishing in southern Africa by 2010.

“This will impact the amount of rough sent to the United States, Belgium and Israel,” she said.

However, she added, the impact of this will be mitigated by the fact that actually it will be U.S., Israeli and Belgian manufacturers who will be polishing the rough dimaonds in southern Africa.

DTC, the marketing arm of De Beers, the world’s top diamond producer, has set uup joint ventures in Botswana and Namibia to distribute the rough to be produced locally. De Beers is 45 percent owned by Anglo American Plc (AAL.L).

Shine said these new companies will be “a template for how the DTC will work with new producers in the future”.

Even if site activitires will be eventually moved to the African joint ventures, London’s DTC will continue to run the pricing policy and to set prices of rough according to market conditions, she added.

Namibian Diamond Commissioner Kennedy Hamutenya said the Namibian company, NDTC, was set up to drive the beneficiation strategy.

“We want to see a real, viable, sustainable manufacturing sector for the future,” he said at the conference.

Mooketsi Jongman, the chief minerals officer of the Ministry of Energy and Water Resources in Botswana, said his country wants to shed its image of being a predominantly mining country.

“The time has come to build (our) diamond industry,” he said.

He said Botswana does not intend to be a threat to other diamond centres as its aim was to polish only a small amount of rough diamonds.

“The current target is to polish $550 million by 2009. It is difficult to understand how this could upset the balance in other centres,” he said.

Billionaire Lev Leviev, whose company LLD is Israel’s leading diamond exporter, said the only way to improve profitability in the industry is for big producers of rough to differentiate their supply to polishers, ensuring that each polisher will have its own niche.

This will prevent price-cutting competition among manufacturers, which is hurting the industry.

Reporting by Shoshanna Solomon, Editing by Tova Cohen

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