Net of Antwerp Conference: Africa Must Do Its Part, Work with Established Centers

15 08 2010

RAPAPORT… Antwerp, Belgium: Some 500 attendees at the 2007 Antwerp Diamond Conference heard industry leaders express  support for the beneficiation policies of diamond producing states. African governments were urged by speakers at the conference to make use of the history, skills, and knowledge of established centers such as Antwerp as they move to create cutting and polishing plants in order to create more added value for their diamonds locally.

The two-day conference was opened at the Flanders Congress & Concert Centre on October 15 by Antwerp World Diamond Centre CEO Freddy J. Hanard, who welcomed participants from more than 40 countries across five continents. Noting the theme of the event, which was “Producers in Transition: The Changing Industry Dynamic,” he said that producer states were looking to change a status quo in that has existed in the diamond business for many years.

Conference moderator Chaim Evan-Zohar said that conference participants were watching history being made, as London’s 350-year exclusive control of global diamond distribution came to an end, in part because of De Beers’ construction of a massive sorting facility in the Botswana capital of Gaborone which, when it opens in 2008, will take over from London and the sorting and distribution centre for the company’s southern Africa production. “It heralds the end of the colonial policies which view producer countries merely as exporters of their valuable commodities–denying them the right to self-determination in terms of the uses of their nations’ mineral wealth. The main African producers and, I should add, also Russia, must make choices and define their own national, economic and social interests in the disposal of its mineral resources.”

But Evan-Zohar saw an increased role for Antwerp in the developing new world order. “The single-greatest competitive advantage that De Beers enjoyed in London was its ability to deliver to the market excellent assortments, consistency of sorting, and it had the critical mass of rough to enable creation of very marketable parcels. None of the producing countries alone will have the critical mass to do either the same or have a global orientation in how to bring rough to the most natural parties for processing. Antwerp will continue to have that critical mass and it may well be the only place to have it. It will function as the central clearing house of rough,” he explained.

Keynote speaker Joseph Stiglitz, the 2001 Nobel Prize winner in economics, said that changes taking place in the diamond business in the diamond pipeline held out the possibility for the improvement of the lives of millions of Africans living in diamond-producing states. “Although it has been claimed that Africa has not succeeded because it has not taken part in the globalization process, this is the wrong interpretation,” Stiglitz said. “Africa has been affected by globalization, but in ways that were unfair to it. These included unfair trade practices that have made the continent worse off.” He said Africa’s resources had been extracted without making the countries involved better off. “This led to the paradox of countries that enjoyed the possession of mineral resources being worse off than countries that did not have them.”

De Beers managing director Gareth Penny said “resource nationalism” was a growing trend across the globe, but that for African diamond producing countries “beneficiation was not an option, not a passing whim motivated by political correctness, but an imperative, an absolutely essential and critical part of their macroeconomic policy designed to uplift their economies to provide education, jobs and healthcare for their people, and to make poverty history.” Penny added that traditional centers like Antwerp had nothing to fear from the changes. “I would argue that without Antwerp these new cutting centers will not succeed. Both diamond producers and producer governments must recognize the vitally important role that the industry here in Antwerp and, for that matter, around the world will play in helping bring the vision of an African diamond manufacturing industry to life.”

Kago G. Moshashane, the acting permanent secretary at Botswana’s Ministry of Minerals, Energy and Water Resources, said that although his country is today the world’s largest producer of rough diamonds by value, his country’s economy is also wholly dependent upon rough diamond production. “We need to emphasize diversification within the mining sector. Local value addition is viewed as an open option to that end.” But Moshashane stressed that his government will not pursue beneficiation in an irresponsible manner. “Botswana aspires and aims to create a world class diamond centre. Being fully alive to the natural and simple constraints that face us, however, we are happy to operate within those constraints to optimize value for our economy. Botswana does not desire to recklessly compete where she does not have the natural advantage to do so. We rather wish to actively seek synergies with other world diamond centres and other stakeholders across the industry from mine to market.”

In her speech, South Africa’s minister of Minerals and Energy Buyelwa Sonjica said beneficiation was a break with the past where Africa’s resources were sold without adding value to the producer states. “For so long, African countries did not receive a fair price for their resources. We must create cutting and polishing plants so that we can have sustainable development. We do not want hand-outs, we want investors,” she said.

The final speaker, ALROSA president Sergey Vybornov, injected a discorded note at the end of the conference citing the experience of cutting and polishing plants that belonged to ALROSA. He said that they had not been economical despite the advantage of receiving supplies directly from their parent company. “We have stopped any form of subsidy in Russia. Only the market can decide,” he said. Vybornov called on the African states that are setting up manufacturing plants: “Not to repeat our mistakes. They want to create jobs and increase revenues, but this argument is false. These operations need investments of hundreds of millions of dollars, but the large diamond financing banks do not have a presence in Africa. If plants are set up, the focus should be on economic viability and populist measures must be rejected.”

Vybornov’s comments generated a lively discussion, which was joined in by South Africa’s minister of Minerals and Energy. “My question for Mr. Vybornov is will Russia be prepared to supply rough to our beneficiating factories?” Sonjica said. “We plan to beneficiate all our countries minerals” Vybornov replied that Russia would be prepared to supply South African factories.

“All I suggest is that we let the market decide,” he said.

The traditional gala dinner of the Antwerp Diamond Conference was held during the evening of October 15, in the presence of HRH Princess Mathilde of Belgium. Some 1,300 guests heard speeches by Liberia’s President Ellen Johnson Sirleaf, Africa’s first freely elected woman head of state, and development campaigner Sir Bob Geldof. Johnson Sirleaf spoke about her government’s plans to develop the country’s diamond sector following a civil war and the misuse of its rich resources.
Liberia was accepted as a Kimberley Process member earlier this year. Geldof gave his frank opinion on how Western countries, and particularly Europe, must do more to assist the developing economies in Africa. The guests also were treated to a spectacular jewellery exhibition.

The Antwerp World Diamond Centre (AWDC) is the official representative of the Belgian diamond sector, and in this capacity is charged with managing the relationship between the diamond sector and government, and promoting the interests of the Belgian diamond industry worldwide.




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