Ernie Blom shares insights at South Africa’s Diamond Indaba

Ernie Blom, lent his perspectives of local, regional and global scale, with regards to the challenges faced by South Africa with regards to the diamond industry. He noted that South Africa is ironically not viewed in the right light considering the strength it holds in its natural treasures and precious minerals finds itself today facing a steep decline. He cited the current industry constrains and dearth of demand for diamonds globally, in turn pulling down demand for diamonds from South African mines, as well as throughout the world.

He mentioned it was ironic that although the concept of the beneficiation of South African rough diamonds was started in this country in the early 1930s, it still faces difficulty to find an economic model to justify diamond cutting and polishing at home. The State Diamond Trader, although good as an idea has not actualised its aims.

An industry cannot be forced into sustainability by imposing export levies because it would impact producers, and there needs to be a fair and logical tax regime in line with international standards. The business environment must encourage local manufacturers to buy and polish stones, which requires costs have to be reduced on the stones to make it profitable to polish. Tax incentives, for example, or grants for employing and training staff would help. The contribution has to be beyond just extracting rough and selling it abroad. More value needs to be added to drive employment and much-needed revenues for the state.

Citing examples of India, Israel, Antwerp and Dubai, Blom added that the mining business in South Africa can be strengthened with close cooperation between its government and industry. Again taking examples of centers like India and Israel, he brought forth another angle of the structure of the diamond sectors wherein importance is given to marketing their diamonds, a large presence at the leading diamond trade shows, presence on the internet in various languages suited to global markets. He pointed out that this is the ‘kind of forward thinking that the South African industry needs to adopt. ‘The global diamond industry is extremely competitive and every country and firm is fighting for business. It's all about taking the initiative and presenting yourself as a must go to market,’ he noted.

He appreciated the importance of South Africa as a cradle of the modern diamond business, but it suffers from high levels of unnecessary red tape and, a lack of unified action between government and industry. He cited the importance of official investment in creating a real manufacturing base, or other ways to enable its citizens to enjoy the benefits of diamonds.

He said, ministerial consistency was critical and that the South African diamond industry must reinvent its role in diamond mining, to reassess its capabilities and skill-sets. It would require commitment on the part of the government and a full and open dialogue. He mentioned that one needs to decide between being a beneficiation industry that is a mere shadow of itself, or one that will attract buyers from all corners of the globe. He highlighted the importance of improving the attractiveness of the country and the industry as an investment destination, in that the industry should show its willingness to work with government in simplifying the regulatory framework. The government could play an even bigger role in supporting the industry and to attract investment in mining – not least in providing encouragement to a new generation of business leaders and entrepreneurs. He concluded by saying, ‘Above all, the South African mining industry itself has to be more productive. Only by doing so, will mining companies be able to both generate profits and safeguard employment through the cycles.’