State Diamond Trader Gauteng Economic Indaba June 2016

Mineral Beneficiation Value addition to mineral resources and its socio-economic benefits for SA: Industrial development,new industry creation and New skills acquisition Job creation Additional economic activity options for youth entrepreneurs Higher value finished products for local and international markets Contribution to economy Importance of adding value to South Africa’s mineral resources is critical and recognition crystalised in the Beneficiation Strategy of South Africa (2011) 2

State Diamond Trader To give effect to legislation providing for mineral beneficiation such as the MPRDA, 2002, the State Diamond Trader was established per the amendments to the Diamonds Act of 1986, as amended in 2005 by Acts 29 of 2005 and 30 of 2005 The State Diamond Trader’s objectives are: – to promote the beneficiation of and equitable access to diamond resources mined in South Africa – to promote the South African diamond industry through necessary research, support and development required by the industry 3

Natural Resources - diamonds 4

Challenges to local beneficiation Access to finance – credit worthiness of industry especially new entrants coupled with poor understanding of diamond sector Access to profitable markets which are mainly international Antiquated marketing messages which mean nothing to new market players such as the millenials Poor local consumption of beneficiated diamond products with SA consuming imported finished products in the main Fragmentation within the beneficiation industry Business environment which is not conducive to growth and competition with various global beneficiation centres 5

Global diamond beneficiation Challenges are not unique to SA, diamond producing nations are “discouraged” from local beneficition – hence low levels of beneficiation in Africa – as global players look mainly for rough Major diamond centres like Antwerp, Tel Aviv have drastically reduced beneficiation and outsourcing to India being the main drive except for exceptional work Poor governance among many diamond businesses internationally which impact on new centres in the financing, supply chain and marketing of beneficiated products space Generic marketing of diamonds, with relevant messages, essential to competitiveness for diamond products. New marketing attempts now on this through PDA and WDM Synthetics prevalence and debates on disclosure coupled with transgressions and competitive marketing against natural diamonds 6

Interventions for growth In realising the challenges facing new entrants and the diamond industry at large, the State Diamond Trader has been implementing these interventions over the past few years: Enterprise Development Programme for Youth Training in various diamond skills for youth Opening up of marketing opportunities for diamond businesses Engagements with various public and private sector funding agencies Support for the newly created SA Diamond Beneficiators Guild which seeks to provide support to new entrants 7

State Diamond Trader Visit us at: Talk to us on: Tel: 011 – /2