The performance of the State Diamond Trader, which was set up to promote the local beneficiation of diamonds, was not satisfactory, Parliament’s mineral resources committee has concluded.
Diamond exporters have to make up to 10% of their rough diamonds available to the State Diamond Trader so that it can supply historically disadvantaged beneficiators.
The finding was made in the committee’s report on the annual 2017-18 performance plan of the Department of Mineral Resources and its entities.
"The business model of the State Diamond Trader, by the admission of its CEO, remains flawed and in need of urgent review," the report said.
"The State Diamond Trader has the highest budget of all the entities managed by the department. It has, however, failed to make full use its legal entitlement to sell up to 10% of SA’s diamonds, to the targeted group (historically disadvantaged individuals).
"It buys less than 3% of its 10% quota of diamond production, and under its watch diamond beneficiation in the country has decreased, resulting in the loss of hundreds of jobs."
In her briefing to the committee, CEO Futhi Zikalala Mvelase said the State Diamond Trader planned to increase its supply of rough diamonds to historically disadvantaged beneficiators by 25% over the next five year period. The increase for 2017-18 is pegged at 5%.
She said the entity planned to support new entrants into the industry through a hub that would ensure their access to relevant equipment.
It would finalise the business plan for the hub and secure funding in the current financial year.
For the 2016-17 year the State Diamond Trader projected diamond sales for the year of R650.7m and a gross profit of R25m. Earnings before interest and tax are projected at R1.33m after overhead costs of about R23.7m.