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Debmarine Namibia's new diamond recovery vessel to arrive in SA next week

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Hard Stone Processing: The backbone of the industry should be the manufacturers

23 january 2012

In July 2007, the Namibian arm of Diamond Trading Company announced competitive selection among the country’s diamond cutting factories to be included into the first list of NDTC sightholders. At that time, Hard Stone Processing (Pty) Ltd (HSP) was already working in Namibia as an independent manufacturer and its factory successfully occupied a strong position among the leading sightholders turning into one of the three top diamond cutting companies in Namibia.

Thanks to timely taken sound decisions of its CEO Burhan Seber Hard Stone improved its performance from year to year. Today the company’s diamond cutting and polishing factory in Windhoek employs nearly 100 Namibian cutters using the most advanced technologies, including Sarin Galaxy, to produce high quality large-size polished diamonds of Triple Excellent grades.

Mr. Seber, why did you choose Namibia?

Namibia in 2001 was a country aspiring to become a center for diamond cutting and polishing, to greater beneficiate from its diamonds. HSP likewise was searching for a reliable direct source, and Namibia was a natural choice since its diamonds are renowned to be the best in the world. It was an obvious partnership.

How many diamond cutting factories are there in Namibia today and what is their business mood?

At the current time, there are 11 diamond factories working in Namibia, though two more are in the process of being established. The sentiment is low, reflecting the international conditions, though all have remained operational. Unfortunately, factories are usually the first to get affected. Price drops do not only affect new purchases, but all the goods in the pipeline back 3 to 5 months.

Could you say what your main sales markets are?

Middle East and Far East.

Can you give any metrics on your company’s performance in 2011 compared with 2010?

2010 was quite a good year. The first half of 2011 was even better, but just as I said, price drops in July changed that significantly, affecting the pipeline and thus most purchases in the first half of 2011. So our predictions for 2011 are pessimistic. Recent price stabilization might improve performance for 2012; at least we hope.

In which aspects is this trading system good for you? What are its benefits and drawbacks in your view?

Regular supply is a must in a “suppliers” business model. It helps plan and forecast, which allows for growth. This is also beneficial for our clients.

Naturally, restrictions in the ways we can operate in a producing country give us a disadvantage in the bad times. And the much higher costs of production accentuate that disadvantage.

What kind of difficulties do sightholders face trying to remain in the system?

Our major goal is not to stay in the sightholders system, the challenge is to be competitive and have market advantage, which is what we need to do in any case regardless of the sightholder system. 

What is your view of the existing diamond pricing system, as a sightholder?

There is something seriously wrong with having polished diamond prices being dictated by a non-transparent and inefficient system, Rapaport. 

This is not to criticize Rapaport, as we alone are to blame in choosing to use that system. On the contrary, he should be commended for having introduced it. But the industry must get together and adopt a new independent pricing system for polished diamonds.

What is your take of the situation with rough and polished diamonds in Namibia now?

The diamond industry in Namibia is generally healthy. Production has increased on the mining side. Manufacturing has increased as well. Hopefully it continues, but there is definitely increasing strain on the system due to the international market condition.

Do you see from your own experience if diamond exports from Namibia move north, south or stay flat?

Certainly there are no advantages, exports have increased, but let’s see what happens in 2012.

How do you see prospects for further development of the diamond industry in Namibia?

Development of the industry in Namibia has been remarkable, so just sustaining it would be considered a success.

What do you think what needs to be done to have a successful diamond market?

Realign rough and polished prices. Manufacturers are the ones most affected by price fluctuations. Dealers have much greater flexibility and therefore better enjoy both the good and bad times. But the backbone of the industry should be the manufacturers and therefore closer attention has to be paid to protecting their interests. Otherwise, diamonds risk becoming simply a commodity.

Are there any possibilities to discover new diamond fields in the south of Africa?

Sure, there are, it all depends on the research process of new deposits and depends of resolution from the relevant authorities.

As I remember, you were one of the Founders of the Diamond Manufacturers’ Association of Namibia (DIAMAN). Why was this association established and what have you achieved today?

Yes we are one of the founders’ and I am the current Chairman. DIAMAN is well established and represents the Namibian cutting and polishing industry both nationally and internationally. The association has great support and provides one voice for the industry.

Could you say a few words about the cooperation between DIAMAN and the Government of Namibia?

Interaction with all stakeholders is very important, and this includes both Government (GRN) and NDTC. Under the umbrella of the Ministry of Mines and Energy, the trio have put together a “think-tank” to discuss industry matters openly and see how we can improve the industry both locally and internationally, making Namibia more competitive.

Recently, DIAMAN donated money to GRN for the floods in the north in Namibia.

Veronica Novoselova, Rough&Polished correspondent in Italy