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Cape Town - South Africa's state diamond trader said on Friday it expected to more than treble its purchases of stones next year, though it added that the plan would hinge on the health of the embattled sector.
Diamond producers, including South Africa's De Beers, have cut their supply of diamonds in response to shrinking demand in Europe, the United States and other key markets hard hit by the global financial crisis.
De Beers, the world's largest diamond producer, is 45 percent owned by Anglo American Plc.
"We expect to reach up to 10 percent from all producers, in particular De Beers, by mid-2009 depending on the global economic challenges," Futhi Zikalala, the chief executive of the State Diamond Trader, told Reuters in an interview.
The state trader, which was established to help spur the development of a diamond processing industry in South Africa, is buying about 3 percent of the diamonds produced in the country, one of the largest producers in the world.
It estimated that it would receive 1.5 million carats of rough diamonds valued at $150 million if it reached the 10-percent target, the maximum that it is allowed to buy under South African law.
South Africa's government has complained that the country loses jobs and taxes by allowing the bulk of its diamond production to be processed abroad, mostly in China, India, Israel and Belgium.
It has threatened to punish companies that refuse to comply with the mandatory diamond sales to the state trader, which then resells the stones locally, mostly to black cutters and polishers.
Industry players have in the past said sanctioning firms could harm the sector in the long run by forcing the closure of marginal mines and small diamond producers, leading to job losses and a fall in diamond output.
Zikalala, however, said the state trader was pushing ahead with the effort and was considering expanding its purchases to include stones from neighbouring countries, including Botswana and Angola.
De Beers is the only supplier of diamonds to the state trader.
- Reuters