Two possible reasons come to mind to explain why the two Belgian-owned diamond cutting factories in Vietnam shun publicity. Number one, they think they are onto a good thing and don't want anyone else to know, and secondly, both are reluctant to admit that some aspects of their operations have drawn considerable flack in the local business community.
Steiglitz and Grossman of Belgium have been operating the Saigon Diamond Co in Ho Chi Minh City for nearly three years, with a workforce of 200. Management of Saigon Diamond is handled by the Steiglitz and Grossman Sri Lankan subsidiary Caladium (Pvt) Ltd. Output is about 2,000 carats of polished per month of small-sized, full cut rounds, and working are currently smooth and profitable, reported Saliya De Saram, one of the revolving factory managers from Sri Lanka.
In Hanoi, Gem Invest International recently starting cutting diamonds with a workforce of 30. Some report have said that the factory has already expanded to 100 employees and is preparing to reach its optimum level of 160, however, this was denied by the head company in Antwerp. Diamontaire David Milmovich and his Inimaxo group are behind the venture.
Mr. Milmovich is also said to be in partnership with the government, as one visitor to the factory reported seeing "swarms of very official looking people watching over the workers." This information has not been confirmed, however, and laws are in place to allow full ownership by foreigners if they choose to go it alone.
Mr. Milmovich us reluctant to comment. Apparently he has run into some problems with the government and all the conditions he had to agree to. He has also said that publicizing the factory would only highlight the issue and aggravate the officials involved.
More information is available on the problems that plagued Saigon Diamond's start. A labor dispute made headlines in the local press. The Tuoi Tre newspaper reported that shortly after the factory opened it had "persistent conflicts between the management and the workers." This problem was ready to "break out into a major crisis as staff said that they are working nervously and know nothing about tomorrow because the threat of dismissal is always lingering."
The article went on to say that payments based on performance were unfair and that supervisors expected far too much from employees. When they didn't meet the conditions set they were systematically fired. The newspaper also reported that a year previous, 60 female workers staged a strike claiming insufficient wages.
Further allegations reported were that workers had been insulted, slapped and even bodily thrown. Base wages had been brought down from $25. Individual labor contracts had apparently not been honored.
The accusations were quickly followed by a reply from the Belgian managing director of the factory, Gerrit Yskout. Mr. Yskout had recently taken over the senior position from Eddy Peters, who was blamed for the problems. Mr. Yskout said that Mr. Peters said scant attention to local customs and worker-management relations. His explanation went on to say how the operation was "a capitalist enterprise, which in order to compete successfully in international markets needs ample stock of goods to meet demand, therefore worker overtime is indispensable."
The current manager of Saigon Diamond, Mr. De Saram, confirmed that the problem existed and said that this was the reason he and his colleagues from Colandium were brought in by parent company Steiglitz and Grossman. Mr. De Saram and his colleagues were assigned the duty of bringing Saigon Diamond Co up to scratch. Managers from Colandium take turns traveling from Sri Lanka to Vietnam to oversee production.
Tensions at the factory have eased, Mr. De Saram said, since the Sri Lankans trained several Vietnamese to work as direct supervisors of the workers.
But the the dispute shows just how sensitive Vietnam, particularly in the south of the country where the people are more attuned to capitalist ways.
Salaries were enormously, depending not on just the industry but on who the proprietors are and what deal they managed to strike with the local government. Companies wholly-owned by Vietnamese, with no relationship to foreigners, pay salaries ranging from 165,000 to 330,000 dong ($15 to $30) per month. Government employees earn even less than this.
Until recently, foreign companies and Vietnamese companies with foreign partners were required by law to pay a minimum of S50 per month, payable in dong at the
Rumors have been coming out of Ho Chi Minh City that diamonds have been found in Vietnam. Some gemstone cutters and traders have reported that "diamond-like" stones have been offered to them.
This has occurred on more than one occasion at the Savitech gem cutting factory in downtown Ho Chi Minh, however, company geologist Nguyen Thanh Xuan told JewelSiam that she had not studied any of the stones in detail, so no confirmation could be made.
Professor Tran Kim Thach, who heads up Ho Chi Minh University's Factory of Geology and also serves the government as a private consultant, denied that diamonds have already been found, but added that their discovery is a very real possibility in the near future.
Foreign educated and a self-confessed mineral enthusiast, Professor Tran notes that diamonds have been tapped in countries surrounding Vietnam - including deposits in the Chinese provinces of Shandong, Hunan, and Liaoning - and he "would not be at all surprised" to hear of a major find in Vietnam.
The professor bases his theory on the "mobile earth" concept of geological formations caused by shifting plates of land.
The explanations goes like this: 30 million years ago, the Indochinese peninsula, Kalimantan (on the island of Borneo), the Philippines and one corner of southern China formed a single land mass, a real continental one. The alkaline-basalt and other ultra-basic-derived magmas beneath this mass, through vents and cracks, burst out on the earth’s surface. With this expulsion, diamonds cam to the surface and later concentrated in placers of stream beds and rivers.
Kalimantan gegan exporting diamonds centuries ago from gem fields mined by local peasants and Chinese. Five mining regions were reported active in the past century, the first region begin in the western corner of the island. The second, and most important region, remains the southeast placer fields of Mount Babaris, near Martapura.
Three famous stones from the region have gone down in history: the 367 carat Danau Rafja discovered in 1917; the exceptionally pure Star of Sawawakat at 70 carats; and the Bantam at 36 carats.
Before drifting south to its present location, Borneo, as suggested by French geologist Fromaget in 1927, was linked to central Indochina. Recently, more scientific papers dealing with the opening of Vietnam’s Eastern Sea between
Prevailing rate. In May, however, in an apartment bid to encourage more foreign investment, Vietnam lowered the wage for employees of foreign-invested companies from $30-$35 a month.
Foreign companies and joint ventures in Hanoi and Ho Chi Minh City must pay their workers at least $35 per month, according to the Labor Ministry decision, while the $30 minimum applies to enterprises operating elsewhere in Vietnam.
Mr. De Saram said that Saigon Diamond pays its workers an average of $60 to $70 a month and several cutters earn in excess of $100. the work week is six day, mine hours a day, and no other benefits are given. Even though the company previously negotiated a minimum wage of $50, he said the company must pay more or the workers would leave. According to him, during the two years that he has been one of the managers, only a small number of workers have left and their reason for leaving had nothing to do with either wages or working conditions. All staff are females between 18 and 22 years old.
All rouge is imported from Antwerp and no taxes apply to these imports, although corporate tax is paid on profits. Each package must be individually cleared with Vietnamese customs official and the same applies when exporting the polished goods. Quantities are matched and all production must leave the country.
Currency transactions are conducted through the State Bank in US dollars and then local costs are paid for in dong at the prevailing rate. The company said that few problems occur and the exchange rate’s fluctuation makes little difference on overhead costs.
All goods are salable and the factory has no plans to cut makeable, Mr. De Saram said. Although Steiglitz and Grossman is a De Beers sight holder, Mt De Saram said that most of the rouge coming to Saigon Diamond originates from the open market. Sizes of polished range from 50 per carat to 5 to 6 per carat and some single cuts are done if the rouge is not good.
The factory’s cut goods average in the $500 to $600 per carat price range, which is similar to what they cut in Sri Lanka. The quality of the cutting and the yield achieved is “acceptable,” according to Mr. De Saram. Equipment used is the same as in most other Asian operation; however, they do not carry out any sawing or use electric bruting sticks.
Initial security concerns have also been allayed. Mr. De Saram said that workers are well disciplined and no losses have been reported due to theft. The language barrier is the most serious problem faced by the foreign management; however, they get around this by using translations.
Besides the low labor costs, other advantages for manufacturers in Vietnam include the establishment of a few special economic zones, including one in Ho Chi Minh City. Foreign companies are entitled to corporate tax holidays and then subsequent low rates after that. Profits transferred abroad are subject only to a five percent tax.
Parcels and the Spratley Archipelagos, brought in data to reconstruct this ancient like between the two land masses.
“This is the way which, I believe, could lead us to the discovery of diamond in Vietnam,” Professor Tran said. As for quality he reckons that industrial grade diamonds are more likely, however he does not rule out gem quality goods.
Professor Tran pinpoints the most promising area to Kontom Block in central Vietnam, a belt that stretches for 20,000 square kilometers through several provinces.
While no region has been officially mapped for diamond mining, documents from the Ministry of Heavy Industry show that considerable geological research has been done throughout the whole of the country.
Exploration began when several Western geologists surveyed the country in 1882 and continued up to 1978. During the past 35 years, geological mapping has been conducted in Vietnam on a small scale, while large scale mapping continues to be carried out in a number of prospective areas for mineral resources.
The Ministry cites a geological survey of North Vietnam by Davjikov in 1963 and full country map made in 1982 by Vietnamese geologists Tran Duc Luong and Nguyen Xuan Bao as having great significance. A metallogenic map produced in 1986 by Nguyen Nghiem Minh and Vu Ngoc Hai is also said to hold valuable data on the distribution and genesis of mineral resources.
Professor Tran says that a diamond discovery is most likely to occur in tandem with a gold mining concession given to an Australian company in central Vietnam. “The mining technique is similar,” he said, “and I am confident that they have the expertise to look for diamonds without needing to actually implement a separate project.”
The professor is referring to the firm Cocitory Ltd which set up a joint venture with Bogomin to mine gold in Bong Mieu, 90 kilometers north of Danang.
The site itself was discovered and developed by the French as early as 1985. Cocitory is to provide 80 percent of the $13 million initial investment as well as the technology.
A few other Australian companies have been resource ralted deals going, including the giant BHP which is active in coal mining and the Perth-based Macro Corp, which has an interest in graphite. Both these ventures also fall inside the area where Professor Tran says that diamonds most likely to exist, which broadens the possibility of a discovery.