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Blom Urges Joint Effort to Mend South Africa Trade
Feb 18, 2019 9:33 AM
By Rapaport News
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RAPAPORT... World Federation of Diamond Bourses (WFDB)
president Ernie Blom has called for the industry and government to collaborate
and rebuild South Africa’s diamond trade following massive
downsizing of the industry.
“The diamond sector worldwide has flourished when close cooperation between
government and industry prevails,” Blom said last week, following an address by Gwede Mantashe, the country’s minister of mineral
resources, at the annual Investing in African Mining Indaba conference.
The South African diamond industry has been on a downward spiral, Blom said,
noting the number of cutters and polishers had dropped from 4,500 a few years
ago to fewer than 300 in 2019. Some 800 licensed jewelry manufacturers operate
in the country today, as opposed to 3,200 in 2008.
In an open letter to Mantashe, Blom pointed out that despite the minister’s
comments that the red tape associated with processing operating licenses was
the main obstacle the industry faced, many other issues have impacted the
country’s diamond trade.
There are six other major problems, according to Blom. One issue surrounds the
complex rules associated with beneficiation — a method of adding economic value
to a country through the creation of jobs in other parts of the trade. There is
also a lack of clear communication between the government and industry members
in terms of policy, Blom notes.
Additionally, the trade deals with tax
structures that favor importers, meaning that approximately 80% of diamonds and
jewelry sold in the country are imported. He also cited overregulation of the
industry, lack of access to necessary funding, and rampant crime, which stops
consumers from buying jewelry and prevents proprietors from opening new stores.
These problems are in direct contrast with international competitors, whose
governments are working together with the industry, Blom said, pointing to
India, China, Korea and Israel.
“Looking at the road ahead, it is my sincere belief that if the government and
the industry work together to develop a thriving local diamond-and-jewelry
platform, we will not only create employment, but also handsome financial
benefits for South Africa,” Blom said. “We have many case studies from around
the world that have been implemented abroad, and this could form the basis of a
brand-new joint strategy for the local market.”
The South African Ministry of Mineral Resources
had not responded to requests for comment from Rapaport News at press
time.
Image: WFDB president Ernest Blom. (Laurent Boeki)
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Tags:
Blom, Department of Mineral Resources, Ernie Blom, Gwede Mantashe, Investing in Africa Mining Indaba, Minister of Mineral Resources, Rapaport News, WFDB, World Federation of Diamond Bourses
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