South Africa's Industrial Development Corporation, which has put up the funding for the State Diamond Trader (SDT), wants the way the diamond trader operates to be "tweaked" amid dissatisfaction from rough diamond miners about the way it functions, Mining Weekly reported.



The SDT has a mandate to buy rough diamonds from producers in South Africa to sell to cutters and polishers to boost the downstream sector, creating jobs and adding value to diamonds, boosting revenues for government coffers when they are exported at higher prices, the report said.



The plan is to make more rough diamonds available to the cutters and polishers, alleviating whatever bottlenecks there might have been in the past, it said



The IDC's head of mining and beneficiation, Abel Malinga, said there were certain changes to the SDT the IDC would like to see, particularly on how its mandate is being implemented to ensure there is a bigger mix of diamonds available from a broader range of producers to make available to the diamond cutting and polishing sector to improve their margins.



Business Day newspaper reported in April this year the Diamond Council of South Africa had put together a working group to find ways to ensure the survival of diamond cutters, polishers and dealers. The council's CEO, Braen Migogo, told the newspaper South Africa's diamond beneficiators had come under pressure for more than a year, resulting in the closure of five large companies, including some De Beers sightholders.



However, the SDT has generated a fair bit of criticism from the diamond producers over wrangles about what constitutes market related prices for rough diamonds and the lack of funds within the trader, said the miningweekly report.



“The main objective of the SDT still stands, but how it’s implemented needs to be tweaked,” Malinga said. “In the first year you want to see if the systems and procedures on diamond buying and internal controls work before perfecting the business model.”



He declined to be more specific what exactly needs to be tweaked and why.

The IDC was about to increase its 10-year rolling R60 million loan to the SDT to R100 million, but then the global markets turned and commodity prices fell in the second half of 2008. Diamond prices fell hard and that plan is on ice until there’s a recovery, the report said.



“The intention is not so much to support the SDT as to stimulate the diamond cutting and polishing sector,” said Ufikile Khumalo, divisional executive of resource sectors at the IDC.

New mines minister Susan Shabangu said in June the Department of Mineral Resources was thinking about a new business model for the SDT, Business Day reported in June.



The problem with the current model was that it was business-orientated, rather than developmental, in its approach, the newspaper reported her as saying in her budget vote speech. The new plan would enable the SDT to promote equitable access to, and beneficiation of, diamond resources and address distortions in the diamond industry.