The deputy minister of public enterprises Bulelani Magwanishe has communicated an extremely worrying picture about the prospects of South Africa’s diamond manufacturing industry.
Speaking at annual general meeting of state owned diamond miner, Alexkor, Magwanise said the South African diamond industry is in a structural decline. “Annual diamond production has decreased since 2005, when it peaked at just over 15 million carats. There is an indication that the 2012 production figures will be about 7 million carats”.
Quoting from the Bain & Company Global Diamond Report 2013 he said “Even though the retail market for diamond products is showing signs of recovery, production is yet to return to pre-crisis levels. Total rough-diamond output increased by 4% in 2012 to 128 million carats, which is still below the pre-crisis peak of 176 million carats in 2006”.
Magwanise said only eleven new mines were expected to come online from 2012 through 2023 and these are not large enough to offset the projected shortfall in the supply of rough diamonds.
He said the diamond value chain was taking strain. “The diamond manufacturing sector, which forms a key part of the government’s beneficiation plan, has shrunk in size. In just three years, it has gone from 3 000 polishers to about 300”.
This leaves the industry effectively with two choices, that is, adapt or die. These are the precise choices facing Alexkor”.
On Alexkor’s prospects Magwanise said Alexkor achieved 93% of its contracted key performance targets, this despite the Board being in office for only seven month. Alexkor also brought in a new CEO Percy Khoza in April 2013.
“The Board has stabled the best governance and management structures, and is in the process of building the prerequisite human capabilities for driving business results.
I have taken note that the Board has taken decisive steps to unlock value of the Poling and Sharing Joint Venture (PSJV) through investment in exploration activities and other efficiency improving initiatives. The focus on land mining is going to be intensified”.
He said the PSJV has procured a modular exploration plant worth R50 million which is going to be commissioned in the 2013/14 financial year. “The investment is a positive message to the people of Richtersveld and Namaqualand. Over 200 jobs are expected to be created through this investment”.
The Minister has requested the Board to ensure that the people of Ritchersveld are favoured in filling of jobs and business opportunities as a result of this ramping up of investment activities in Alexander Bay. Our view is that the sustainability of the PSJV is interwoven with the welfare of the beneficiaries of the Ritchersveld land claimants”.