Building bridges
Industry analyst Chaim Even-Zohar was an advisor in the Northwest Territories when diamonds were first discovered in Canada. He says collaboration between government and mining companies is critical.
“The problem with Canada is that it’s an open, free trade country,” Even-Zohar told Jewellery Business at the Prospectors & Developers Association of Canada (PDAC) conference in Toronto earlier this year.
“If you look at Botswana, it has factories because the government and De Beers say it has to. They may lose money, but they’re still there. [The Canadian] government cannot compel producers or private companies to sell goods to domestic factories. The agreements you have with De Beers and others are voluntary agreements.”
Razi Mizrahi, owner of Summit Diamonds, Inc., says one of the major obstacles is allocation of rough. Right now, most of the rough Canada produces gets shipped to places like Antwerp or London and mixed into boxes, with only about 10 per cent pulled out to be cut as Canadian.
Creating a rough diamond trading centre in Canada would not only make it easier for sightholders, who currently have to travel to those centres to do business, but it may help sustain a local secondary industry to a greater extent. Without a steady and meaningful supply of rough, opening more cutting factories makes little sense. Government incentives like tax breaks to help train new cutters may also make the proposition more enticing to companies looking to set up cutting factories.
David Gavin, president of the Diamond Bourse of Canada (DBC), is all for keeping more rough in Canada, but is not optimistic that will happen. He says recent discussions with major sightholders at the JCK Las Vegas show indicate there is some interest in local cutting if more rough was held back.
“But most said they would be happy to buy the rough in Canada and take it away to be cut,” he adds.
Dylan Dix, group executive, marketing and external relations for Crossworks Manufacturing, agrees that partnerships between government and mining companies to provide goods are a must.
Through its agreements with the Ontario government and De Beers Canada, Crossworks receives 10 per cent of the rough by value originating from the Victor mine in Northern Ontario to be cut at its facility in Sudbury. Like Botha, Dix says branding and proprietary cuts can increase the allure to overcome the price difference.
“We’re competing against polishing in China and India,” Dix says. “You have to create competitive advantages for yourself. The Canadian diamond cutting industry will never have 250,000 cutters like in India, but I think we offer a way of looking at our resources that we can innovate and be competitive.”
Allen Shechtman, vice-president of the bourse and chief executive officer (CEO) of Martin Ross Group, says legislation is key to growing a secondary industry.
“From the bourse perspective, we need to look at lobbying the various governments that seem to have some control over who they allow in to first of all, prospect, and secondly, to take over and acquire mines,” he says. “They need to put some teeth into how they’re allowing investors to [enter the local diamond industry], whether it’s a Canadian investor or a foreign one. There should be some legislation in place to maintain more control over natural resources.”
