Sandile Nogxina, director-general, DME
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Nogxina lays down the ideology
Brendan Ryan
Posted: Fri, 29 Feb 2008

[miningmx.com] -- SANDILE Nogxina, director general of the Department of Minerals and Energy, stressed the political imperatives behind the creation of the State Diamond Trader (SDT) at today’s launch in Johannesburg.

Presenting the keynote address on behalf of Minister of Minerals and Energy Buyelwa Sonjica - who was unable to attend the launch function at the Diamond Centre where the SDT will have its offices - Nogxina deviated from the prepared text to make his points.

He warned the CEO’s and chairpersons of the SDT - and its sister organisation the South African Diamonds and Precious Metals Regulator - to stick to the mandates in terms of which these organisations were created.

“You have been created to serve a particular purpose. You are likely to come under pressure to deviate and follow a different agenda to the ones for which the institutions were created. If you do, the people of South Africa will never forgive you,” Nogxina said.

He thanked the SA mining industry in general for backing the new mining legislation but pointed out there were a number of companies which still did not support it.

“These companies can exercise their constitutional rights and can carry on not supporting us but they cannot stop us,” he said.

In reply Stephen Phiri, chairperson of the Diamonds and Precious Metals Regulator, told Nogxina the regulator would be “fearless and aggressive when necessary” to justify its role in ensuring that the value of the mineral wealth of the country was increased and benefited all South Africa’s people.

“It is incumbent on us that history does not judge us badly and as failures,” he said.

The SDT has been set up to buy up to 10% of South Africa’s total rough diamond output from the producing mines and then make these diamonds available for local cutting and polishing.

The SDT has been operating on a “pilot” basis since late last year and has a target of June this year to become fully operational and self-sustaining.

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It has been funded so far by the IDC which has made available funding of R65m on “rollover” basis to buy diamonds. That amount could be increased up to a limit of R1bn depending on how the business developed.

The SDT is also being supported by De Beers which has seconded eight technical staff formerly employed by its Diamdel marketing arm which has been closed down.

The De Beers staff are contracted to work with the SDT for three years during which they will train up staff to replace them.

The priorities of the SDT include supplying ensuring historically disadvantaged South Africans (HDSAS) who previously could not get access to rough diamond supplies will be able to buy them and to promote local beneficiation.

That meant increasing the volume of diamonds cut and polished in South Africa as well as increasing employment numbers in this sector. The aim was equitable access to diamonds at competitive prices.

These aims have been criticised by some in the SA diamond industry as “unrealistic” on the grounds that South Africa’s high labour costs mean it cannot compete with the diamond cutting centres established in India and China.

Referring to this Phiri commented; “the Chinese and Indians had to start somewhere to get to where they are today. We will start in the same way.”

SDT chairperson Linda Makatini said the organisation was currently finalising the conditions under which it would conduct business.

These would include that companies buying from the SDT have an, as yet unspecified, level of black economic empowerment and also commit to beneficiate the diamonds by cutting and polishing them locally.

She was unable to specify at this stage what volume of diamonds the SDT was likely to buy over the next year as it established itself.

Makatini criticised the former structure of the diamond industry in South Africa because it was not prepared to recognise the role that Government could play in developing the level of beneficiation in the industry.