Story of a Miner

RAPAPORT… As the son, grandson and great-grandson of diamond miners in South Africa, Charl Gentle was determined to escape his family history. He even swore he would never return to Kimberley.

“On school holidays, my friends went to the beach. I had to go and sort for my dad,” Gentle recalls of his childhood in the 1960s and 1970s. When he wasn’t attending classes and studying in Cape Town, the disgruntled youngster was working in the mining enterprise his father and grandfather had established in South Africa’s arid interior. Despite its immense importance to diamond mining, Kimberley and environs seemed like the middle of nowhere. “I said to myself, ‘Never again.’”

It wasn’t just childhood boredom, tedious work and rebelliousness that prompted Gentle to go his own way, but also the prospect of living under the government-sanctioned racial segregation known as apartheid and working under a monopoly. “My father, grandfather and great-grandfather sold their diamonds to De Beers. You had to take what they gave you. That was it, period.”

A NEW GENERATION

Now, in a great irony, Gentle, 44, finds himself adding to Kimberley’s mining history in a post-apartheid — and what some consider a post-De Beers — era. De Beers still maintains a large presence in Kimberley and wields worldwide influence. But the monolithic diamond producer no longer buys all of the diamonds of all the independent miners in South Africa — nor does it attempt to. Gentle and several dozen other independent miners in Kimberley typically sell what they find at one of the diamond markets in town where international buyers have gathered regularly since the mid-1990s.

“It’s one of the few places where you’ll see an Arab and a Jew sitting beside each other,” Gentle says of Kimberley’s diamond markets, called “tender houses.”

De Beers stopped underground mining in Kimberley in late 2005 — resulting in the loss of nearly 1,000 jobs — and put various other South African mines up for sale, including the famous Cullinan mine near Pretoria. The company has a deal pending to sell its Kimberley mines to Petra Diamonds and its joint venture partner, Sedibeng Mining, a Black Economic Empowerment (BEE) firm. Some of De Beers moves, especially the abrupt announcement of the mine closures in 2005, have sparked criticism by labor unions and in Kimberley’s newspaper, Diamond Fields Advertiser. Even old-timers, such as Joe Fernandes, a diamond consultant under government contract who claims De Beers had a “good reputation” for fair dealings in its previous role as Kimberley’s sole diamond buyer, raise questions. Fernandes asks, “Why is Kimberley not growing like Botswana?”

While Botswana is home to the world’s most profitable diamond mine, co-owned by that nation’s government and De Beers, Kimberley is in transition. The town’s current construction boom, featuring middle-class homes, a fancy shopping mall and a renovated historic mining district to boost tourism, seems to contradict the area’s high unemployment rate — just under 40 percent.

SMALL, BUT THRIVING

Many small operators such as Gentle admit they are thriving, but they can’t possibly absorb all of De Beers laid-off workers. “The independents here are producing $21 million worth of diamonds every week,” he says, while holding up a “pink” that one of his diggers found near the Orange River. The flat, rough diamond weighs 10.38 carats.

Alluvial mining operations such as Gentle’s are tracked by the South African Diamond Producers Organization (SADPO) and total about 200. They employ approximately 7,000 people in the Northern Cape province. In fiscal 2007, they mined 360,000 carats valued at $650 per carat. “We represent a small portion of the mining industry,” says Marti Lotter, the trade group’s spokesman in Kimberley.

One of Gentle’s diggers recently found a large 123-carat, colorless, D diamond valued at $4.3 million. Such treasures make Gentle hopeful of the future and hopeful that Kimberley is not doomed to become a historic curiosity.

Talk of a free trade zone, which would eliminate taxes on diamonds, could help boost buying in Kimberley. The South African government also has said it wants to establish a tender house in Kimberley, where miners would be obliged to sell 10 percent of their production, a requirement designed to reserve stones for the nation’s nascent diamond-cutting industry.

Although Gentle is no fan of De Beers — “For me, they were part of Big Brother” — oddly enough, his enthusiasm about mining in Kimberley plays perfectly into De Beers current philosophy of passing the torch. According to Lisa Brugmann, De Beers media relations coordinator in Kimberley, “We don’t want to be the dominant player. We want to open up other avenues for other players.” And Tom Tweedy, De Beers media relations manager in Johannesburg, says, “We’re changing from a model of diamond production control to a model of diamond leadership. We don’t seek to be a supplier after every diamond that’s cut in the world.”

The planned sale of De Beers abandoned underground mines in Kimberley and elsewhere transfers ownership to small-scale mining firms that might have a better chance of extracting profits. In addition, De Beers encourages business with BEE companies, such as Ekapa and Sedibeng in Kimberley.

CHANGING TIMES

In an effort to reduce the economic disparity that is the legacy of apartheid, South African companies, big and small, are under a federal mandate to secure black co-owners. The deadlines and percentages of ownership vary by industry and the numerous government agencies monitoring the process. “This Black Empowerment is an upliftment strategy,” says Gentle, who recruited Mzwandile “Shakes” Shwababa in 2006 to be a co-owner of his mining company.

Such a partnership would have been inconceivable in 1983, when Gentle left South Africa following his university studies and military service. For 17 years, he operated a stone-cutting workshop, jewelry design boutique and retail store in Naples, Florida. Gentle even sold African art. “I wanted to be in warm weather,” he says, “and Naples seemed to have the most millionaires at any given time.”

Lucrative but dangerous opportunities brought Gentle back full circle to his African mining roots. While still managing his Florida business, he commuted to the former Zaire, now Democratic Republic of Congo (DRC), and Angola to mine and deal in diamond rough. He formed a partnership with Angola President Jose Eduardo dos Santos and mined diamonds in a war zone under army protection. The end of apartheid and birth of democracy in South Africa enticed Gentle to return home in 2002. “Mining is in the genes, to keep doing what your family did,” he says, noting his great-grandfather lived in a corrugated iron shack in Boshof.

In Kimberley, Gentle looked for an established firm with which he was compatible and persuaded Ronnie Graven to let him become an investor in Graven Mining. With earnings from previous endeavors, Gentle bought more equipment and boosted operations. The Graven family enterprise, along with Gentle’s mining permit holder, Bo-Karoo Diamond Mining Ltd., together employ more than 200 people.

The two entities joined forces with Kimberley Consolidated Mines, which plans to go public in November. Plans are for the penny stock to be traded on the Johannesburg and London stock exchanges. “I said to myself, ‘Never again,’” Gentle says, shaking his head, “and look, I’m back.”