Most gem-quality diamonds come from southern Africa, but very few of them are cut and polished in the region. Lev Leviev, an Israeli diamond tycoon, wants to change that.

With his new factory here in Windhoek, and another being built in Angola, Leviev has launched a broadside at the way the industry works, championing the processing of diamonds in the country of production.

His efforts to promote local "beneficiation," as it is called in the industry, while still small, are already causing some nervousness in traditional diamond centers like Antwerp, Belgium. Yet the move strikes a chord with some African politicians, who see a chance for more returns and economic development from their natural resources.

Using Namibia simply as a source of raw material without capturing the value-added downstream manufacturing squanders the potential of the country's most valuable resource, said Kombadayedu Kapwanga, Namibia's former minister of mines who is now the managing director at Leviev's factory.

"As a patriot, I can't allow that," he said in an interview.

By promoting local beneficiation, Leviev, owner of the Lev Leviev Group and Africa-Israel Investments, also hopes to strengthen his No. 2 position in the diamond industry, of which the market for uncut stones alone is worth about $12 billion a year. The De Beers corporation has famously dominated the diamond business for more than a century, but its control has slipped in recent years under growing competition from new, non-De Beers mines in countries like Canada.

Leviev, who has been described as De Beers's closest rival, has polishing plants in Russia, India, China, South Africa, Ukraine and Armenia.

De Beers said last month that it expected record sales this year of at least $6.4 billion. By comparison, Leviev's group has annual sales of more than $2.5 billion. His new factory in Namibia, which opened last year and began official production in June, is cutting and polishing 25,000 carats of diamonds a month. While that is a small percentage of Namibia's annual output of two million carats, it has helped prove the concept to a steady stream of visiting politicians.

In a speech to industry executives in April, Erkki Nghimtina, Namibia's minister of mines and energy, suggested that he would press De Beers to allow more rough diamonds to be processed locally.

"I am prepared to go to extra lengths to ensure that beneficiation becomes a necessary condition for the granting of any mineral rights," he said.

Under longstanding contracts, De Beers exports almost all of the diamonds it mines in the region to London for resale through the De Beers marketing arm, the Diamond Trading Corp. The DTC, which sells about half of all diamonds in the world, is the primary way that De Beers controls the market.

Nghimtina's demands for local beneficiation may influence talks on renewing the agreement between De Beers and Namibia, which currently obligates Namibia to sell almost all its diamonds to the Diamond Trading Corp. The existing contract expires in November.

A significant shift to local beneficiation could weaken the DTC's control by allowing competitors like Leviev greater direct access to rough diamonds. But other industry players are watching closely as well.

Stephane Fischler, president of the European Council of Diamond Manufacturers and secretary general of the International Diamond Manufacturers Association, warned of a potentially "serious effect" on the traditional diamond polishing centers, including Antwerp, New York and Tel Aviv.

Since Namibia's diamonds tend to be very large, gem-quality stones, any shift to local beneficiation would have a disproportionate effect on centers, like Antwerp, that mostly polish expensive stones.

"The stakes are very high indeed," Fischler said.

Namibia is not alone in its desire to squeeze more money, and jobs, out of its raw materials. Last week, Lindiwe Hendriks, the newly appointed South African minister of minerals and energy, said that she expected the country's two diamond beneficiation bills to be passed by Parliament before year's end. Botswana, the world's largest source of diamonds, is also rumored to be considering a local beneficiation requirement.

Analysts say rising diamond prices, in part due to De Beers's own efforts, are encouraging competitors like Leviev to take up the cause of African governments.

A De Beers initiative called Supplier of Choice has cut to 84 the number of dealers to whom De Beers sells diamonds. In the 18 months that the initiative has been in place, the price of rough diamonds has risen 30 percent.

"It was De Beers's own squeeze that created the imbalance which encourages companies to raid their turf," said Martin Rapaport, chairman of Rapaport Research, which provides analysis of the diamond industry.

Leviev's factory in Angola will have up to 3,000 employees. Other companies are getting in on the act as well, like Lazare Kaplan and DD Manufacturing, which are opening cutting and polishing plants in South Africa.

Leviev's factory in Windhoek is the first large-scale diamond factory on the continent. The factory currently provides 550 jobs, and Kapwanga, the managing director, hopes to add another shift soon.

In one room, a few dozen workers oversee hundreds of diamond saws that slowly slice through rough diamonds.

Since diamond is the hardest natural substance known, diamonds must be used to cut diamonds, and it can take hours to cut a large specimen. Most come from off Namibia's coast, where Leviev uses four ships to vacuum diamond-bearing silt off the sea floor.

The new factory hums with work. In one room, workers monitor the diamond saws. In two adjacent rooms, hundreds of workers grind the rough-cut diamonds into gems by pressing the stones onto spinning diamond-dust-covered platters. Other rooms are used for analyzing, sorting and storing the stones.

Experts from Leviev's factories across the former Soviet Union oversaw a recent work shift as they finished their yearlong training of the local staff.

Employees are excited to have the work in a country where unemployment is endemic.

"There is a future here," said Jordan Kazohya, 26, a diamond polisher who supports his mother and seven sisters on his salary of $540 a month. "Namibia will use this company as an example of how to do better."