South African Minister of Minerals and Energy Phumzile
Mlambo-Ngcuka last week made it clear that government intends to
impose an export duty on the country’s diamond sector to
encourage local beneficiation.
Mlambo-Ngcuka was speaking at a workshop of the Diamond Foundation
of South Africa, in Johannesburg, aimed at formulating specific
recommendations to be taken into account in the finalisation of
government’s pending Diamond Bill, which will replace the
current Diamond Act of 1986.
Industry stakeholders earlier voiced their opposition to the
proposed 5% export duty, saying it could hamper the entry of new
participants to the sector, including black economic empiron ore beneficiation processes of washingowerment
(BEE) entities.
Legal consultant Fiona Tappen pointed out that, as with the
proposed Royalty Bill, the diamond sector seems to have been
singled out, as import duties are not to be imposed on any other
minerals, while the Royalty Bill will seemingly impose higher
royalties on the diamond sector.
“Is this discrimination?” she askecrusher manufacturers of europed, adding that the
proposal could be challenged constitutionally.
She also maintained that the duty would, in fact, be a penalty and
called for the retention of the penalty-deferment process, which
forms part of the Diamond Act of 1986.
However, speaking later during the workshop, Mlambo-Ngcuka
indicated that export duties would be imposed to reverse trends
introduced bstone crusher supplier in south africay the previous government, which encouraged exports of
rough diamonds, instead of attracting local cutters, thus letting
the downstream industry lose out on competitiveness.
To this end, Section 59 of the Act will be amended to ensure that
diamond beneficiation licensees obtain a regular supply of
unpolished diamonds, while the Diamond Board will be able to enter
into an agreement with anstone crusher project subsidyy producer, dealer or association, which
must allocate or offer unpolished diamonds to diamond beneficiation
licensees.
But, Mlambo-Ngcuka warned, introducing export levies may not be
enough, and the Department of Minerals and Energy is currently in
consultation with the Department of Trade and Industry regarding
further measures that would encourage a bigger flow of rough
diamonds into the local marketaggregate crushing plant manufactures.
The current Act, said Mlambo-Ngcuka, also discourages ownership and
access to rough diamonds, while providing no security of supply to
local cutters. Government will, she pointed out, ensure security of
supply for small beneficiators.
In addition, she revealed plans to amend the Diamond Board to make
it an independent body, instead of consisting of members who
represent specific industry stakeholders, as is currently the
case.
“Eventually it will be impossible to be a dealer who buys and
sells rough diamonds without doing any beneficiation in South
Africa,” Mlambo-Ngcuka stated.
Responding to the Minister’s comments, Diamond Trading
Company (a De Beers company) MD Gareth Penny urged the South
African diamond sector to embrace government’s proposed
change, in order to promote equitable access, promote
beneficiation, which will create jobs, encourage new entrants and
further BEE.
He argued that supply is not the biggest problem facing the local
downstream industry, as 50% of De Beers’ production last year
was considered economic to cut in South Africa, and R3,5-billion of
rough diamonds were supplied locally.
Meanwhile, the number of cutting jobs in the country is also
steadily growing by some 18% a year, Penny claimed.
However, he pointed out that various other challenges, such as
massive international competition, lack of an integrated supply
chain, low market spend and low levels of brand power, are
currently hampering the local diamond sector and the development of
downstream industry.