South African diamonds are no longer staying in South Africa for cutting and polishing, or so says Itan Kaplan, chairman of South African Diamond Manufacturing Association or SADMA. The organization, which represents 90% of the benefication industry in South Africa, has dwindled from 1, 200 people to 900. Kaplan estimates that only 600 of those employees actually do benefication work directly.
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The cause of the decline are the tight regulations enacted by South African government that have caused diamonds to be sent overseas for cutting and polishing. In addition, manufacturing costs in the country are high. Three years ago, there were 25 sightholders, and that number has dwindled to eight.
In addition DeBeers sold its mines to Petra, and DeBeer’s contract model of doing business is less volatile than Petra’s selling through tenders. The future of the benefication industry in South African, says Kaplan, may mean more consolidation and fewer players. “The diamonds will be in fewer local hands.”