IDI Rough Diamonds Seminar Talks Supply

July 15, 2004

IDI Rough Diamonds Seminar Talks Supply

The Israel Diamond Institute's Rough Diamond Seminar, took place July 12-13 in Tel Aviv, bringing together more than two dozen of the world's present and future diamond producers and more than 550 members of Israel's diamond industry. The two-day event included presentations about diamond mining activities, as well as opportunities for diamantaires to explore investment in mining ventures in Africa, Canada, Russia, Australia and South America.

Among the guests at the seminar were Ehud Olmert, Israel's Deputy Prime Minister and Minister of Industry, Trade & Labor; Alhaji Swarray Deen, Sierra Leone Minister of Natural Resources; Gustave Luabeya Tshitala, director general of MIBA mining company in the Democratic Republic of Congo; Manuel Arnaldo de Sousa Calada of Endiama Group in Angola; Abbey Chikane, chairman of the South African Diamond Board; Dave Ramsay, assemblyman from Canada's Northwest Territories; Peter Gross from ABN AMRO Bank, executives from Russia's Alrosa and De Beers' Diamond Trading Co., plus mining exploration companies and mining investment advisors BHP Billiton, Majescor, Stornoway Diamonds, Brazilian Diamonds, SouthernEra Resources, Shore Gold, Mano River Resources, Vaaldiam Resources, and Cannacord. Israeli diamantaires active in diamond mining and cutting also spoke at the seminar, including Lev Leviev, chairman of the Leviev Group, and Alexander Waldman, a shareholder of Magna Egoli Mine in Sierra Leone.

Organizers said the seminar offered Israeli participants a look into the possibilities as well as the complexities of producing diamonds, while exposing exploration and mining companies to the needs and resources of Israel's diamond manufacturing community. The event offered both sides an opportunity to network, exchange ideas and develop business contacts for investment and joint ventures.

Leviev called on Israeli diamantaires to form a "pool" to invest in mining operations in Africa. He also emphasized it was important to share the wealth from rough mining operations with host countries in Africa, by providing knowledge and setting up polishing plants in those countries. He also announced the opening of Sodiam International Ltd. Israel, a diamond marketing joint venture between Angola's Endiama and the Leviev Group to sell Angolan rough. Leviev has become a significant supplier of rough diamonds to Israel, with one executive pointing out to Israel's Haaretz news organization that in 2003, the Leviev Group brought $900,000 worth of rough diamonds to Israel, versus the $830 million supplied by De Beers.

The seminar showed that while there are still untapped reserves of rough in traditional locations in Africa, these are declining and future growth will come from other areas, especially Canada, says Simcha Lustig, chairman of IDI. "Presently known diamond reserves in the world are depleting and if no significant new discoveries are made, the world may run out of diamonds. If we want to team up with upstream players, we must take a far wider perspective of our business," says Lustig.

"We want to turn Israel into a trading center for rough as well as polished diamonds. Our strength lies in having a steady supply of rough," says Moti Ganz, president of the Israel Diamond Manufacturers' Association. "The mining companies are investing their expertise in seeking the rough; our members can help with the finance."

Rough supply is one of the most significant challenges facing the world diamond industry today, says Shmuel Schnitzer, president of the Israel Diamond Exchange and the World Federation of Diamond Bourses. The recent problems in rough supply make it imperative to sustain the manufacturing industry in Israel, especially the small and medium-sized manufacturers, he says. "I am certain that important business ventures will ensue from these contacts, and our sources of rough diamonds will be widened," says Schnitzer.

At the seminar, Dow Jones newswires reported the Democratic Republic of Congo's biggest diamond-mining company, MIBA, is in "very advanced negotiations" with De Beers and BHP Billiton to develop concessions in the African country, according to Gustave Luabeya Tshitala, MIBA's president director-general.

MIBA, which is also known as Societe Miniere De Bakwanga, is looking to secure partners to explore and develop the bulk of 78,000 square kilometers of concessions in the DRC. Currently only 40 square kilometers of territory are being mined, but MIBA is willing to assign up to 26,000 square kilometers to any one mining company in order to boost the DRC's diamond production, says Tshitala. MIBA has ruled out giving concessions to just one company.

MIBA, which produces 7.5 million carats a year, is 80% owned by the DRC government, and 20% by Belgium company Sibeka. Sibeka, in turn, is 80% held by Belgian metals company Umicore SA and 20% held by De Beers. MIBA traditionally has focused on industrial diamonds but is now looking at mining gem-quality stones, says Tshitala. The DRC was the world's sixth-largest diamond producer in 2003, with rough-diamond output totaling $700 million, according to De Beers. A spokeswoman at BHP Billiton, the Anglo-Australian resources giant, wasn't able to confirm it is in talks with MIBA. De Beers officials weren't immediately available for comment.

Reuters also reported that DRC will reach $1 billion in rough diamond exports by 2006, according to Victor Kasongo, chief executive officer of Centre D'Evaluation, D'Expertise Et De Certification, the DRC government's diamond supervisory agency, also known as CEEC. The increase will come due to a lessening of diamonds smuggled out of the country, mostly to nearby Congo Republic, which was recently barred from continuing membership in the Kimberley Process Certification Scheme. DRC's own adherence to the rules of the Kimberley scheme will be examined in the next few months by an international Kimberley inspection team.

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