Suashish has mothballed its diamond jewelry manufacturing plant in Botswana, less than a year after starting operations, citing unattainable raw material costs, Mmegi reported.
The global diamond and diamond jewelry manufacturing and exporting company opened the plant eight months ago to become the second Diamond Trading Company Botswana (DTCB) sightholder, after Shrenuj Botswana, to further beneficiate the precious stones locally, said the report.
In an interview with Business Week, Diamond Hub coordinator Jacob Thamage, confirmed the closure of the plant whose establishment last year was the hallmark of diamond downstream beneficiation, employing forty people, the report said.
"We have received communication from the owners of the company in India that they have decided to mothball the plant due to the high costs of raw material, particularly gold and other precious materials. We don't know how long the plant will be closed for or what is going to happen to the workers. We are still trying to get more information. The diamond cutting and polishing plant however remains operational," he said.
The fate of the jewelry plant workers is still unclear. Efforts to get a comment from Suashish officials both locally and in India proved futile by press time. The closure of the plant will be a setback for diamond beneficiation as Suashish is one of only two DTCB sightholders to take the first step further into the diamond value chain, adding jewelry to diamond exploration, mining and polishing activities conducted locally, said the report.
In 2007, Suashish Diamonds became the first Indian company to receive DTC Sightholder status in Botswana and invested close to $2 million to set up a 10,000 square feet diamond cutting and polishing facility in Gaborone, it said.
The Mumbai Stock Exchange-listed company sells both polished diamonds and diamond jewelry throughout the world from a network of sales offices located in Mumbai, New Delhi, Hong Kong, Dallas and Ottawa, Mmegi said.
Suashish was expected to bring its 50 years of expertise to the local jewelry plant as it is already vertically integrated, dealing in diamond manufacturing, jewelry and retail. The Indian group specializes in state-of-the-art jewelry plants and boasts of capacity to produce 1.2 million pieces annually, the report said.
In Botswana, jewelry manufacturing has been identified as one of the beneficiation avenues as the country nudges ahead with ambitions to be involved in all phases of the diamond value chain.
Already, Shrenuj Botswana has said that it will invest up to $100 million over the next two years to establish and operate a combined diamond cutting and polishing and jewelry making factory in Gaborone. Shrenuj, one of Botswana's 21 local DTC sightholders, exports its goods to the United States under the terms of a trade arrangement, said the report.
"There are interesting times ahead for Botswana and we very much want to be part of the changes that Botswana is set to experience in the next few years," he said. "Our two plants in Gaborone will be integrated into one huge plant. Construction of the factory is estimated to cost about $10 million while our costs, including our working capital, should be between $80 and $100 million," company chairman Shreyas Doshi told Business Week in an earlier interview.
He added that the company, which has an annual turnover of $580 million, has plans to open a retail outlet for jewelry in Gaborone.