Three major African diamond-producing nations are mounting a strategic response to the growing synthetic diamond market. Photo: AFP
Diamond mining countries Angola, Botswana and Namibia have launched the seeds of a fightback against the inroads that synthetic, laboratory grown diamonds are making on the global diamond market, and it has nothing to do with traditional marketing campaigns.
“It is not a marketing campaign, but a campaign to tell the truth,” De Beers Botswana CEO Al Cook said in a discussion about the economic benefits for African countries of diamond mining, at the Investing in African Mining Indaba held in Cape Town on Tuesday.
An online search reveals that synthetic diamonds equal to one quarter of total natural diamond production was produced globally last year. Synthetic diamonds have had the effect of lowering diamond prices and have become competition for diamond miners in markets where consumers have become discerning about the environmental impact of their luxury goods purchases,
Cook said some factors in their favour in the marketing of natural diamonds is a growing demand among consumers for authentic products.
Another factor that would aid the natural diamond market was the development of a tool that could discern within three seconds whether a diamond is synthetic or natural. And a third factor that could boost natural diamond demand was that for the first time, all new diamonds can be traced to their country of origin.
He said the agreement announced this week between De Beers and Botswana to extend and further the collaboration in diamond mining between the parties, was also the first time a government and a company had come together to try to market more diamonds and the agreement provides for the establishment of a jointly owned diamond marketing company.
He said the key problem was that consumers do not know of the story of economic growth and development behind natural diamond, whereas there is no such story for synthetic diamonds,
He said, just as one example, was Botswana’s Mining Minister for only 100 days since the last election, Bogolo Kenewendo, a woman who had been born in a hospital built on diamond finance, who lived in a house funded by diamonds, who went to a school funded by diamonds, who went to university funded by diamonds, and who had gone further to study overseas on funds from diamond mining.
Kenewendo said the natural diamond industry had lost the edge of marketing itself properly, and the three diamond producing countries needed to work together on this.
Miguel Vemba, a director of Mining Operations and Joint Venture at the Angolan national diamond company Endiama EP, said a big part of the structural problem in the diamond market was that of inventory management.
He said De Beers had held the market since the 1880’s by controlling diamond supply and inventory according to the demand at the time, but much later, the mining of diamonds in Canada, Australia and Russia had democratised the global diamond market, and had created an oversupply in the market of diamonds.
He said natural diamond producers had also stopped marketing natural diamonds to their detriment.
“Who remembers the ‘Diamonds Are Forever’ campaign? Who can remember any other campaign since then,” he asked?
“Behind every natural diamond is a story of transformation, no such thing can happen in a laboratory,” Vemba said.
BUSINESS REPORT