Beneficiation is the term used to describe the processing (cutting and polishing) of rough diamonds at the source itself. De Beers was instrumental in furthering beneficiation in South Africa and Botswana.
It created a new system that requires Sightholders to cut and polish diamonds in the country of origin. These Sightholders are selected on an important criterion of extent of domestic beneficiation, as part of its ‘Supplier of Choice’ strategy. Allocation of rough supply in Botswana, by DTC, depends on local beneficiation.
This trend is only rising. So much so that De Beers forecasts 50%+ high quality diamonds will be locally cut and polished in producing countries in future. Rough Diamond producing countries want to capitalize on cutting and polishing opportunities and expand local employment.
Botswana government in the past has shown inclination to provide financial assistance to local diamond processing and jewelry units. Even during global recession in 2008, Botswana managed to export USD 100 million in polished diamonds, all credited to beneficiation. Now, the country wants to take this forward and Botswana is set to amend its “Diamond Cutting Act” and “Precious and Semi-Precious Stones Act” for further facilitating local beneficiation, expected to be instituted by July 2015.
Following the initial success in Botswana, other diamond producing countries including Zimbabwe and Angola are also keen to increase diamond beneficiation. At least 10% of diamonds are already cut and polished locally in Zimbabwe and it is creating a new diamond center near Harare, to further focus on processing. Zimbabwe is also setting up a training center to increase workforce capabilities in downstream diamond sectors. Murowa Diamonds, a Rio Tinto company, has already started beneficiating its diamonds in Zimbabwe.
Similarly, Angola is set to commence operations in a new diamond cutting plant, intended to increase local beneficiation rather than simply prospecting and mining diamonds. Endiama, Angola’s state-owned diamond company, is ready to polish part of locally mined diamonds. Angola is also planning to create favorable conditions for local production of diamond jewelry.
More countries are adopting beneficiation by creating favorable rules and policies and are being supported by organizations worldwide. GIA supports beneficiation efforts and has appointed a director of development and beneficiation to work with NGOs, trade groups and government agencies for progressing on beneficiation fronts.
There is also rise in emergence of new processing centers in China and elsewhere, which is challenging India’s stand of world’s top diamond polisher. Gaining access to rough supplies by directly investing in mines in Africa has enabled China’s net export of polished diamonds to increase by 72% in the past 5 years, while the figure for India was 49%. As per UN, China has managed to triple its share of global polished diamonds market to 17% in the past decade, while India’s share fluctuated between 19 – 31%. Rise in China’s diamond polishing industry, which is consistent in mass-producing small stones, led to closure of many processing units and job losses in India, according to Sandeep Varia of Assocham.
Apart from China, several new diamond processing centers are mushrooming in countries like Thailand, Armenia and Sri Lanka. Australia’s Argyle Diamond Sales views Thailand as an important diamond cutting and distribution center of the future.
Most of the diamond cutting in developing countries and producer nations however is restricted to small size stones. Bigger size diamonds are still being processed in New York, Antwerp and Israel. Nevertheless, increase in beneficiation and development of new processing centers indicate that diamond cutting and polishing will not be concentrated in few countries but will be distributed across geographies.