SA: No Confidence in Private Diamond Firms

Why the South African government sought to create a State Diamond Trader that will buy rough diamonds from local miners was a matter of speculation. Some believed it was a way to generate extra earnings, other cynically claimed that governments naturally seek to interfere with private enterprise. But an other reason was suggested today: That government simply does not trust private enterprises.

The suggestion was made by South Africa’s State Diamond Board Chairman Abbey Chikane during a presentation at the Israel Diamond Exchange (IDE) on South Africa’s rough diamond industry.

In reply to a question by analyst Chaim Even-Zohar why a State Diamond Trader is needed, Chikane said “The government does not have confidence in private enterprises”.

South Africa is in the midst of approving the Diamond Amendment Bill that will establish, among other, the State Diamond Trader.

The bill will require diamond miners to sell goods to the new body. At this stage it is not completely clear how it will work. Will De Beers, for instance, be required to offer some of its locally mined diamonds to the State Trader and offer the rest on the SA diamond bourse? If so the future of the South African Sights is unclear.

This and many additional questions are being intensely negotiated as the bill is slowly making its way through the different legislative stages in the country’s government. This is process is accompanied by much distrust between the government and the diamond industry, leading at times to emotional outbursts going as far as name calling.