Diamond company De Beers Group (De Beers) has a set of core values that extends beyond recovering and selling world-class diamonds.
Its greater commitment is to drive significant transformation within the diamond sector in South Africa, which entails providing various downstream beneficiation opportunities for historically disadvantaged South Africans – an initiative that has already achieved considerable success, writes LAURA CORNISH.
As a significant employer and economic contributor to the South African economy, De Beers has fully committed itself to bringing greater transformation to the country, and in particular those who traditionally have not been exposed to business opportunities in the past.
“Our best delivery mechanism in this regard is through beneficiation – a strategy we have in place that aligns closely with government’s objectives to truly transform South Africa,” starts Kagiso Fredericks, newly appointed beneficiation manager at De Beers in South Africa. At heart, the company aspires to optimise all aspects of the diamond pipeline from rough diamond purchasing and state-of-the-art manufacturing of diamonds and jewellery to marketing and distribution.
Because this is an essential part of De Beers’ business make-up, the company has defined a four-pillar beneficiation strategy which consolidates various areas of the business into a single, cohesive focus that ensures effective execution:
Pillar 1: Local sales
De Beers is required to sell 40% of its total production by value to local beneficiators. These local beneficiators include sight holders (or De Beers contracted customers) and are required to have a valid beneficiation licence, comply with the B-BBEE scorecard and have local cutting and polishing factories.
Local beneficiators also includes SMEs that have been selected through a rigorous process to be part of the De Beers Enterprise Development Project. Over and above the development programme that they are exposed to, the owners of these SMEs (Beneficiation Project Members (BPMs) are also provided with a consistent rough supply from De Beers with the aim of managing sustainable businesses.
The enterprise development project was first launched by De Beers in 2016 and aims to facilitate the growth and transformation of diamond beneficiation in South Africa. The project has a holistic approach that seeks to optimise interventions in all aspects of the diamond pipeline from rough diamond purchasing, state-of-the-art manufacturing of diamonds and jewellery to marketing and distribution.
Impressively, the first cohort of the five companies selected for the project are HDSA owned – these being Molefi Letsiki Diamonds, Diamonds Africa, Nungu Diamonds, Thoko’s Diamonds and Kwame Diamonds, of which two are 100% female owned. The second cohort of the Enterprise Development Project includes three women-empowered businesses and two black owned businesses – B&H Mining, Irresistible Rough Diamonds, Isabella Jewellers, Outclass Crystalized Gems and Sunrise Gem Stone.
Pillar 2: Customer development
The second beneficiation pillar is ‘customer development’, which sees De Beers defining and enabling BPMs to effectively start and run their own businesses. The starting point for this element was understanding existing inhibitors that prevent local businesses from being successful within the diamond market. Companies selected for the Enterprise Development Project require the necessary support to grow their businesses. This support includes access to finance, access to international markets and access to sustainable rough diamond supply. “From this point we clearly know where and how to assist in these areas,” Fredericks says.
De Beers has partnered with business incubator Raizcorp, which provides a three-year business development programme incorporating mentorship in business strategy, finance, sales, marketing and personal development.
Pillar 3: Industrial development
“In line with our drive for transformation in the diamond industry, De Beers also identifies and creates innovative opportunities beyond general cutting and polishing. We introduced the annual Shining Light Awards in 1996, which is a platform for aspiring designers to showcase their designs and engage with institutions around the world. Incentives for delivering innovative designs is significant – the winner receives a design internship in Milan, the runner-up a three-month internship with De Beers’ Forevermark and the second runner-up an internship at a local jeweller,” Fredericks outlines.
The awards have been extended beyond South Africa and now also include our other producer partner countries in Botswana, Namibia and Canada. The 2020/2021 theme for the awards was entitled “The Evolution of Love & Life”. The winners will be selected per producer partner country, with the announcement to be made in October 2021.
Pillar 4: Consumer confidence
Consumer confidence is an area of increasing interest from consumers who want transparency, clarity and surety of knowing their diamonds were responsibly, and not illegally, sourced. “Our role is to ensure that we as De Beers, sight holders and BPMs adhere to the Kimberley Process, with every diamond traced from the source of extraction until the final diamond jewellery piece is certified for sale. It is imperative that we all adhere to this,” Fredericks highlights.
Evolution always in play
Some of these beneficiation initiatives are clearly not new and yet there is consistent change and evolution from De Beers. “It is refreshing to see new initiatives and evolution taking place as part of the bigger programme. We recently saw a collaboration from a previous Shining Light Awards winner with one of the new BPMs to produce a new jewellery collection showcasing the enduring bonds between mother and daughter,” Fredericks mentions.
The beneficiation arm of De Beers’ business is also one that evolves and transforms with time. The company recently undertook a pilot study in South Africa which saw the BPMs’ Enterprise Development candidates purchase diamonds from De Beers and then sell their jewellery pieces through the De Beers Group Forevermark brand which offers significant international exposure. “While COVID-19 placed some delays on this new initiative, we were happy with the results we achieved and are moving this project into a second phase,” Fredericks notes.
“Ultimately, our objective is to facilitate the establishment of fully functioning and operating diamond cutting, polishing and jewellery businesses that are primarily HDSA owned and we have had great success. To date, we have helped develop 10 new HDSA businesses, the first five have graduated and the other five have started their three-year incubation period and are specialising in cutting, polishing and jewellery manufacture and sales,” Fredericks concludes.