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India eyes JVs with diamond miners

BS Reporter  |  Mumbai 

Plans direct sourcing of rough stones from African, Russian mines to cut costs.
The country is looking at joint venture opportunities with diamond mining companies across Africa, to source rough diamonds directly from those countries.
The rough diamond imports are currently routed through Antwerp, a major global diamond trading hub in Belgium, making the imports costlier by around 11 per cent. The direct sourcing will enable the diamond industry, which operates on thin margins, to save about $1 billion from the total import cost of around $9 billion.
India managed to reach an agreement with Alrosa mine in Russia, which led to direct rough diamond imports of $15 million in the last financial year. The Russian breakthrough came after a series of meetings between the governments of the two countries.
Meanwhile, public sector undertakings Mineral and Metal Trading Corporation (MMTC) and National Minerals Development Corporation (NMDC) are likely to submit a report by mid-May on the proposal to explore jointly gold mines in Azerbaijan and Uzbekistan.
"We are focusing on Azerbaijan and Uzbekistan only for gold mines, where we are assured of getting a priority. We are also looking for joint venture opportunities in diamond mines of Angola, South Africa and other African countries in addition to Russia," said Minister of State for Industry and Commerce Jairam Ramesh.
Botswana consists of 26 per cent of the world's diamond reserves, while Namibia and South Africa comprise 15 per cent and 12 per cent reserves, respectively. India is keen on providing training facilities to workers in foreign countries by setting up institutes there. In South Africa, the local government is contemplating promoting diamond-processing facilities locally.
Diamond Trading Company (DTC), currently, supplies about 25 per cent of rough diamonds to India through its 38 siteholders. Unlike Antwerp, which is mainly a trading centre, India is one of the few processing hubs and it makes business sense for miners to supply diamonds directly to the processing zones.
India processed about 58 per cent (worth $10.84 billion) of the world's polished diamonds (worth $18.72 billion) in 2006 and, hence, deserved direct supply of rough diamonds, said Sanjay Kothari, chairman of the Gems and Jewellery Export Promotion Council.
Of the $11 billion worth of diamonds processed in the country, only a negligible $2.8 billion worth of the precious stones underwent value addition. While other expenses were to the tune of $1.3 billion, labour cost contributed approximately $1.5 billion. Hence, there was abundant room for value addition of rough diamonds in the country, said Kothari.
Kothari cautioned that the popularity of synthetic diamond was spreading fast and stressed the need to differentiate between natural and synthetic diamonds to avoid any confusion among customers.
Meanwhile, the government representatives of Angola, another diamond-rich country in Africa, invited Indian businessmen to promote the joint exploration potential in the country with an assurance of all possible support, including compensation in case the proposal did not work out fruitfully.
In another landmark development, the Reserve Bank of India has allowed advance payment for sourcing rough diamonds from Africa, the United Kingdom, Australia, Canada and Russia without any limit or licence.

First Published: Tue, May 01 2007. 00:00 IST