Mumbai, March 19: Impressed by the success of the Indian diamond industry, North Western Territories (NWT) of Canada aims at developing its own diamond industry jointly with Indian players while also helping the latter have easy access to the lucrative jewellery market in the US through its duty-free trade agreement with the US under the North American Free Trade Agreement (NAFTA).For this purpose NWT has adopted a three-pronged approach to develop its diamond industry involving local government, private Canadian companies and foreign (including Indian) companies. The NWT government has eased its policies to invite foreign equity participation in local diamond companies, offer credit finance, loan guarantees, financial assistance, and other sops.NWT's emergence as leading rough diamond supplier comes at a time when global rough diamond suppliers, including diamond major De Beers and its breakaway partner Argyle Diamonds, are realigning themselves to take a piece of the expanding global diamonds market.
Argyle Diamond's success in marketing its diamonds, independent of De Beer's Central Selling Organisation (CSO) was lauded by The Gems and Jewellery Export Promotion Council (Gjepc) Chairman Praveenshankar Pandya at the recently convened international diamond conference held in Mumbai. "If independent diamond producers and marketeers want to succeed in Indian diamond markets, they need to take note of Argyle Diamonds' successful marketing strategies", he said.
After Argyle broke away from De Beer's in mid-1996 and successfully established its name in supplying low-end diamonds to the global markets, other rough diamond mining companies too are keen to enjoy their independence from De Beer's Central Selling Organisation (CSO).
Canada is fast emerging as a strong supplier of rough diamonds to global markets in general and Indian exporters of studded jewels in particular. NWT's thrust comes at a time when some five leading Canadian mining companies, including the BHP World Exploration Inc and Alcan, the global aluminum, among others, are keen to prospect diamonds from Indian diamond deposits.
BHP World Exploration is engaged in prospecting and exploration for minerals, mining other than iron. The other Canadian companies interested in India's diamond deposits are Meridian Peak Resources Corporation and Pro Am Exploration Corporation, both engaged in mineral exploration.
BHP, one of the leading diamond mining company in NWT, jointly with DiaMet Minerals have diamond mines that promise around 3-4 million carats annually and have a life of 20 years. DiaVik Diamonds and RTZ and Aber is another leading alliance in NWT engaged in diamond prospecting through its mines that has a life of 16 years. Even De Beers has its fingers in the NWT diamond industry with Mountain Resources as its partner.
"Indian companies engaged in making (and exporting) diamond studded jewels and wanting direct supplies of rough diamonds can pick up stake in any of these companies", said NWT's director (diamond projects) Martin Irving.Irwing was recently in India to participate in the International Diamond Conference organised in Mumbai by GJEPC.
Speaking to The Financial Express, Irving said that "while Indian jewellery companies can get roughs directly from mining companies, they can help develop our diamond industry by imparting training to our people and even banks which are not too familiar in handling risks associated with the diamond industry. There's opportunity in the entire chain of diamonds - from roughs to studded jewellery".
BHP has agreed to sell 35 per cent of its diamonds through CSO, 55 per cent in the open market in Antwerp (Belgium) and 10 per cent to local diamond companies. BHP, which is said to be "firmly established in the Belgium market", has got mining permission for three more (diamond) pipes. "BHP's mix of diamonds therefore, is expected to change in coming months from current high end to cheap-end products", Irwing said. "Accordingly, customers looking for different grades of diamonds too will change". BHP's "misery mines" (offering diamond roughs of around $20 per carat) is likely to be on stream by early next year.
According to Irving "If the Indian jewel exporters are targeting the US as their main market, it would help them much better if they pick up stake in NWT / Canadian diamond companies. This is because, they can then market their wares to the US market through Canadian companies duty free under the NAFTA (North American Free Trade Agreement).
Number of governments in NWT have chalked out business assisting programmes. Among others, following are the important ones for the diamond industry.
Setting up Business Credit Corporation (BCC) -- a territorial crown corporation to provide financing to business enterprises in NBWT to stimulate economic development and employment in the NWT. This will offer term loans, guarantees and contract security bonding, where the services are not available from an alternative financial institution A maximum of $1 million can be available to any one business or group of related business, maximum interest term is of five years and maximum amortisation is 25 years; payment of principal may be deferred for upto three years in certain cases and interest rate is set quarterly at two points above Canadian Inter-Bank prime rate Business Development Fund - a territorial contributions policy which provides contributions to businesses to stimulate employment and economic benefits Options applicable to include:- (1) Planning and other developmental costs -- maximum 75 per cent of total assistance of $20,000 for any project(2) Assistance for new technology in current planned business ventures - total assistance for any project not to exceed $75,000 (3) Contributions for business creation or expansion - total assistance for any project limited to $25,000 per person per year, unless exceptional income and employment benefits are proposed and with minister's concurrence to a maximum of $250,000. (4) Market development and product promotion - total assistance for any project not to exceed $15,000 per year to a maximum of $45,000 over three years. Loan guarantees to acceptable lender for operating line of credit for an approved NWT diamond manufacturer. Terms may vary, but restricted to normally five years.Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.