I remember, in the three years it took the Kimberley Process to come together, I would periodically get statements from NGOs to the effect that “the Kimberley Process is falling apart” and “the Kimberley Process will never happen.”
Now, granted, I never went to a KP meeting and heard all the political maneuvering, but I never doubted that the KP would happen. There was too much at stake for it not to.
Likewise, I have no doubt that “beneficiation” will happen in Southern Africa, despite the furor over Jonathan Oppenheimer’s comments, which are still being talked about two weeks after they were uttered. “Beneficiation” is still coming together, and there will be some bumps along the way, and it may not meet everyone’s expectations. But I have no doubt that in the coming years there will be a dramatic—and positive—shift to producing diamonds in their country-of-origin. Again, there is too much at stake for it not to happen.
Everyone needs to calm down and take a deep breath. There is already talk of “subsidies” and “mitigating factors” and we are just barely out of the starting gate. The labor—and other—cost differential is a significant issue, but it is only in the last few years that the trade decided everything had to be cut in low labor-cost countries. For decades, diamonds were cut in Antwerp, Israel and New York – which often have higher labor costs than Africa. Clearly, some diamonds can – and will be – economically cut in Africa. It may not be every stone that comes out of the ground, but it will also be a lot more than are being cut there now.
The most interesting thing about all this is how De Beers still has what an executive there once referred to as “trust issues.” (When I told a sightholder this, he said, “They are well-earned.”) For years, it said local cutting was impossible – in part, as Charles Wyndham notes, because it would make the DTC irrelevant. Now it says it’s changed its mind. Apparently the government in South Africa still needs to be convinced.
There are a lot of good people working at De Beers. But it’s pretty sad that it is still viewed with such suspicion that a one-off remark by an executive has become a major political incident.
Granted, the beneficiation process should have begun decades ago, but we cannot rewrite history. De Beers was once legendary for its political savvy in Africa. The company talked with pride about how Mandela visited the Oppenheimers after he got out of prison.
But today it is standing on very thin ice. Just ask Jonathan Oppenheimer.
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