Diamond Industry at a Crossroads: Mantashe Proposes 1% Revenue Contribution for Marketing
South Africa's diamond industry faces a pivotal moment as Mineral and Petroleum Resources Minister Gwede Mantashe proposes a new collective marketing initiative. The plan has sparked significant debate among stakeholders, with large and small producers taking opposing positions on its feasibility and implementation. As industry consolidation trends continue to reshape the sector, this proposal represents a critical intervention.
What is Gwede Mantashe's diamond marketing proposal?
The 1% revenue contribution plan
Minister Gwede Mantashe has proposed that all South African diamond producers contribute 1% of their revenue toward collective diamond marketing efforts. This initiative aims to revitalize natural diamond sales through coordinated mining marketing strategies that would highlight the value and uniqueness of natural diamonds in an increasingly competitive luxury market.
The proposal emerged following a high-level Ministerial roundtable in Luanda, Angola, in June 2025, where representatives from major diamond-producing nations gathered to address industry challenges. Mantashe formally presented this proposal to diamond industry stakeholders during a sector engagement session in Kempton Park on August 5, 2025.
"There was a long discussion about it and they wanted us to sign an accord," Mantashe explained at the engagement session. "I said, in terms of South Africa's culture, I can't sign that accord before doing two things. First, I must take it to Cabinet so that government is aware of the Accord. Second, I said I can't sign the agreement before speaking to the diamond producers."
International collaboration context
The Luanda roundtable brought together Ministers from major African diamond-producing nations including Botswana, Namibia, South Africa, Sierra Leone, and the Democratic Republic of Congo. These nations collectively control a significant portion of the world's natural diamond supply and have a vested interest in maintaining the premium market position of natural diamonds.
Discussions at the roundtable centered on addressing the global mining landscape and the decline in demand and prices for natural diamonds, which has created economic pressures across producer countries. The Ministers explored the possibility of collective financial contributions to support a sustainable global marketing strategy, recognizing that individual country efforts might be insufficient to reverse current market trends.
The proposed marketing initiative represents one of the most significant coordinated efforts among African diamond producers in recent years, potentially creating a new paradigm for how natural resources are marketed globally.
Why is collective diamond marketing necessary now?
Current market challenges
The natural diamond industry faces unprecedented pressure from declining global demand, with consumers increasingly considering alternative luxury purchases or opting for laboratory-grown diamonds. This shift has caused price deterioration affecting profitability across the entire diamond value chain—from mining operations to cutting and polishing facilities to retail outlets.
Small-scale producers are particularly vulnerable to these market fluctuations, as they typically operate with thinner profit margins and have less financial capacity to weather extended downturns. Many junior mining companies lack the reserves to sustain operations through prolonged periods of depressed prices.
The industry needs coordinated efforts to differentiate natural diamonds from synthetic alternatives, which have made significant inroads into traditional diamond markets. Laboratory-grown diamonds have improved in quality while decreasing in price, creating both perception and value challenges for natural diamond producers.
Historical context of diamond marketing
Historically, major players like De Beers dominated marketing efforts for the entire industry. De Beers' iconic "A Diamond is Forever" campaign, launched in 1947, helped establish diamonds as the quintessential symbol of enduring love and commitment. This centralized marketing approach benefited all natural diamond producers by creating sustained consumer demand.
However, the fragmentation of the diamond market over the past two decades has reduced coordinated promotional activities. As De Beers' market share declined from approximately 80% in the 1980s to less than 30% today, industry-wide marketing efforts diminished proportionally. This marketing vacuum has coincided with changing consumer perceptions of diamonds, requiring new approaches to maintain their premium positioning.
Competing luxury goods and changing consumer preferences—particularly among younger generations who place greater emphasis on experiences over possessions and ethical sourcing considerations—have eroded traditional diamond market share. These shifts have created an urgent need for refreshed marketing strategies that speak to contemporary values while preserving the timeless appeal of natural diamonds.
How are industry stakeholders responding to the proposal?
Large producer perspectives
Some major diamond producers have expressed conditional support for the marketing initiative, recognizing the need for collective action to stimulate demand. These companies, with their established market positions and financial reserves, are better positioned to absorb the additional cost of a 1% revenue contribution.
De Beers was specifically mentioned during the stakeholder engagement as having the financial resources to weather current market conditions. As former Orion Minerals CEO Errol Smart noted, "De Beers, as one of the long-life companies, has been able to build up treasuries to survive this." This financial stability allows larger producers to take a longer-term view of market development initiatives.
Large producers also stand to benefit disproportionately from successful marketing campaigns due to their higher production volumes and more extensive distribution networks. Any increase in overall diamond demand would likely translate into greater absolute gains for these companies compared to smaller operators.
Small producer concerns
The South African Diamond Producers Association has voiced significant concerns about the financial feasibility of the proposal for its members. Chairperson Gert van Niekerk pushed back against the initiative during the stakeholder engagement session, stating, "I represent the smaller side of the producing industry – the non-listed companies – and the fact of the matter is, there is no way we can afford, at this stage, 1% of turnover."
Small-scale diamond producers operating on thin margins claim they cannot afford even a 0.1% contribution in the current market environment. Many junior mining operations are "running in the red" according to industry representatives, with diminishing cash reserves and increasing operational costs.
The fundamental concern is that the additional cost burden could force vulnerable operations to close, potentially accelerating industry evolution trends and reducing the diversity of producers in South Africa's diamond sector. This outcome would run counter to the government's broader objectives of maintaining employment and promoting inclusive participation in the mining industry.
Alternative funding suggestions
During the stakeholder engagement, several alternative approaches to funding the marketing initiative were proposed. Most notably, Errol Smart, who chairs the Minerals Council South Africa Junior Exploration and Mining Leadership Forum, suggested redirecting a portion of existing royalty payments rather than imposing an additional financial burden on struggling producers.
"Surely that is a proper diversion of funds to keep this industry alive," Smart argued. "Otherwise, it will fall over, and the whole 3% to 7% will be lost. We're dealing with an industry that's running on broke."
This approach would avoid imposing new financial burdens on struggling producers while still generating the necessary funding for marketing activities. The suggestion frames the marketing contribution as an investment in industry sustainability rather than an additional tax, potentially making it more palatable to producers facing financial constraints.
Other suggestions included a tiered contribution system based on production volume or profitability, which would reduce the burden on smaller operators while still ensuring adequate funding for marketing initiatives.
What is Mantashe's response to industry pushback?
Rejection of royalty redirection
Mantashe firmly dismissed the idea of using state royalties to fund diamond marketing during the stakeholder engagement session. He argued this approach would create an unsustainable precedent for other mining sectors facing similar challenges.
"Everyone suggests that we… tax the State to fund the marketing of rough diamonds," Mantashe said. "But extend that logic. When gold – which is currently doing very well and pays a lot of royalties – runs into problems, we must give that money back. We must then intervene in gold. And by that reasoning, we must do the same with chrome. Chrome has been flooded by Chinese supply, and the price has collapsed."
The minister's rejection reflects broader concerns about fiscal sustainability and the appropriate role of government in supporting specific industries. Royalties represent compensation to the state for the extraction of non-renewable resources, and redirecting these funds would reduce available revenue for public services and infrastructure development.
Semantic arguments and positioning
Mantashe questioned whether the distinction between listed and non-listed companies was relevant to the discussion, focusing instead on revenue-generating capacity. "You say the non-listed companies can't afford 1%. I'm not sure if listing or non-listing really makes a distinction," he noted. "I know of many big companies that are not listed. So, it's not the listing that makes it impossible to pay 1%, it's the capacity of the revenue you generate."
This perspective shifts the conversation from company structure to operational scale and profitability, potentially opening the door to a more nuanced implementation approach that accounts for actual financial capacity rather than formal business classification.
Intriguingly, the minister positioned himself as a potential "chief marketer of diamonds" contingent on industry financial commitment. "The diamond sector must be visible. It must be vocal. We must promote diamonds as being precious, as being vulnerable. That's why that marketing fund is important," Mantashe stated. "We must tell the world how precious natural diamonds are. That's what it is all about. And I'm offering to be the chief marketer of diamonds, but you must commit the 1%, then I manage it."
This offer suggests a more direct governmental role in marketing strategy and implementation than is typical in industry-funded promotional initiatives, raising questions about governance and operational control.
Government position on implementation
Deputy Director-General Tseliso Maqubela indicated there was broad support for the 1% proposal within government circles, while acknowledging potential implementation challenges. "I think there is support for the proposal for the 1%. The original proposal was that it should be extended to all players in the value chain, but the proposal also acknowledged that not everyone is operating at the same level," Maqubela noted.
This statement suggests the government recognizes the need for flexibility in implementation, potentially incorporating a tiered approach that accounts for variations in operational scale and financial capacity across the value chain. Such an approach could address some of the concerns raised by smaller producers while maintaining the fundamental principle of industry-funded marketing.
The government appears committed to moving forward with some version of the marketing contribution, viewing it as essential for the long-term sustainability of South Africa's diamond industry in an increasingly competitive global marketplace.
What are the broader implications for the diamond industry?
Potential impact on South African diamond production
The implementation of a mandatory marketing contribution could accelerate consolidation within South Africa's diamond mining sector. Smaller operators already struggling with thin margins might find the additional cost burden unsustainable, potentially leading to closures or acquisitions by larger, better-capitalized companies.
This consolidation could reshape the competitive landscape, potentially reducing the diversity of producers and increasing market concentration. While this might improve operational efficiency through economies of scale, it could also reduce employment opportunities, particularly in rural areas where small diamond operations often provide crucial local jobs.
South Africa's position in the global diamond market could be affected by changes in producer viability. The country currently ranks among the world's top ten diamond producers by value, but its market share has declined in recent decades. Any reduction in production capacity could further erode South Africa's influence in global diamond markets.
"The diamond industry is extraordinarily fragmented compared to historical norms," noted a senior mining analyst at the stakeholder engagement. "Whether this fragmentation is sustainable in the face of current market pressures remains an open question, with or without additional marketing costs."
Global marketing effectiveness considerations
The effectiveness of collective marketing in stimulating consumer demand remains uncertain, particularly in a rapidly evolving luxury goods marketplace. Traditional diamond marketing focused on emotional associations and timeless value propositions, but contemporary consumers—particularly younger demographics—often prioritize different attributes when making luxury purchases.
Questions remain about how marketing funds would be allocated and managed, including the balance between traditional advertising channels and digital platforms, global versus regional campaigns, and consumer versus trade marketing initiatives. These strategic decisions could significantly impact the return on investment for marketing expenditures.
Coordination between multiple producing countries presents governance challenges that could affect marketing effectiveness. Different national priorities, varying market positions, and potential disagreements about messaging could complicate the development and implementation of cohesive marketing strategies.
Industry sustainability balance
The proposal highlights fundamental tensions between immediate financial pressures and long-term industry health. While current market conditions make additional costs challenging for many producers, underinvestment in marketing could accelerate the erosion of diamond value perception among consumers, ultimately threatening the industry's long-term viability.
Finding equitable contribution mechanisms that don't disadvantage smaller players represents a significant challenge. Potential approaches include graduated contribution rates based on production volume or profitability, exemptions for producers below certain revenue thresholds, or phased implementation that allows companies to adjust their financial planning.
Market differentiation between natural and laboratory-grown diamonds requires sophisticated messaging that emphasizes the unique attributes of natural stones—including their geological rarity, connection to earth's history, and inherent value as non-renewable resources. This differentiation becomes increasingly important as laboratory-grown diamonds improve in quality while decreasing in price.
Consumer education about diamond value propositions needs substantial investment to counter changing perceptions and purchasing behaviors. This education extends beyond traditional marketing to include transparency initiatives, sustainability certification, and ethical sourcing programs that address evolving consumer concerns.
How does this initiative compare to other commodity marketing efforts?
Lessons from other collective marketing programs
Other commodity sectors have implemented successful collective marketing initiatives that could provide valuable insights for the diamond industry. Agricultural products, in particular, often utilize producer-funded promotional programs to maintain market share and build consumer awareness.
For example, the "Got Milk?" campaign in the United States, funded by dairy producers through a small per-unit assessment, successfully increased consumer awareness and helped stabilize declining milk consumption. Similar programs exist for commodities ranging from beef and pork to almonds and avocados, typically funded through mandatory producer contributions.
"Unlike most agricultural marketing programs that assess fees based on production volume, Mantashe's proposal links contributions to revenue. This approach potentially accommodates price volatility but may create administrative complexities related to verification and collection," according to Reuters' reporting on South Africa's diamond marketing push.
Effective programs typically involve proportional contributions based on production or revenue, ensuring larger producers contribute more while maintaining equity across the industry. Governance structures that include stakeholder representation are common in successful models, providing both transparency and industry input into strategic decisions.
Successful commodity marketing programs also typically establish clear performance metrics and regular evaluation processes to assess effectiveness and adjust strategies as needed. These accountability mechanisms help maintain producer support by demonstrating tangible returns on marketing investments.
Diamond-specific marketing challenges
Diamonds face unique marketing challenges as luxury consumer goods rather than commodities in the traditional sense. Unlike agricultural products or industrial metals, diamonds derive much of their value from consumer perception and emotional associations rather than functional utility.
Emotional and aspirational messaging is central to diamond marketing, requiring sophisticated brand-building strategies that differentiate natural diamonds from both synthetic alternatives and competing luxury goods. This emotional connection has historically been diamonds' greatest marketing strength but requires continuous reinforcement and evolution to remain relevant to changing consumer values.
Ethical and sustainability considerations have become increasingly important in diamond marketing, with consumers—particularly younger demographics—expressing growing concerns about environmental impact and social responsibility. According to Mining Weekly's coverage of Mantashe's initiative, addressing these concerns requires both operational improvements and effective communication strategies that highlight the industry's progress.
Digital marketing channels have transformed how consumers engage with luxury products, creating both challenges and opportunities for diamond marketing. Social media platforms, influencer partnerships, and digital storytelling offer new ways to connect with consumers, but require different approaches than traditional print and television advertising that dominated previous diamond marketing eras.
What next steps are expected for the marketing initiative?
Regulatory and implementation timeline
Mantashe indicated he would seek Cabinet approval before formalizing any agreement with other diamond-producing nations or implementing the contribution requirement domestically. This governmental review process could take several months, depending on Cabinet priorities and the complexity of the proposed implementation mechanism.
Further industry consultations are likely to refine the contribution mechanism, potentially incorporating feedback from stakeholders regarding tiered approaches, exemptions, or phase-in periods. These consultations might occur through formal working groups or industry association engagements.
Implementation details including collection methods, enforcement mechanisms, and governance structures remain to be determined. Options could include direct payment to a designated marketing entity, assessment through existing royalty collection frameworks, or establishment of a new industry-funded organization with dedicated administrative capacity.
International coordination with other diamond-producing nations will influence the approach, potentially requiring harmonization of contribution rates, governance structures, and strategic priorities across multiple jurisdictions. This coordination adds complexity but could also increase the initiative's effectiveness through greater resource pooling and market coverage.
Monitoring and evaluation frameworks
Success metrics for the marketing initiative will need to be established to assess effectiveness and justify continued industry contributions. Potential metrics include consumer awareness and perception measurements, natural diamond price trends, market share relative to synthetic alternatives, and retail sales volumes.
Regular reporting on fund utilization and impact will be necessary to maintain industry support and ensure accountability. This reporting might include detailed breakdowns of expenditures by campaign, channel, and market, as well as analysis of performance against established metrics.
Industry stakeholders will likely demand transparency in fund management, including clear governance structures, financial controls, and decision-making processes. This transparency becomes particularly important given the mandatory nature of the contributions and the diverse interests within the industry.
Adjustments to contribution rates may be needed based on market conditions and effectiveness assessments. This flexibility could help address concerns about financial burden during challenging market periods while ensuring adequate resources for marketing during more favorable conditions.
FAQs about diamond marketing initiatives
Why are natural diamonds facing market challenges?
Natural diamonds face unprecedented competition from laboratory-grown diamonds, which have
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