As the deadline for mining conversion rights falls due at the end of April, the Department of Minerals and Energy finds itself with an unintended problem in the form of alluvial diamond diggers in Kimberley in the Northern Cape.
The diggers say the government is strangling their livelihoods with mining reform initiatives that look good on paper but are out of touch with reality. The government, however, says it smells a transformation dodge and is digging in its heels about making concessions.
André Bergh has been a digger for 15 years in the Delportshoop area, about 80km from the capital city. In the past few months he has been forced to call it a day because he says he can’t keep his business viable and meet the new legislative requirements set out by the government.
He is one of hundreds of diggers who are going under, according to Mattie Lotter, chairperson of the white diggers’ organisation, South African Diamond Producers Organisation. Lotter says there are only 164 alluvial diamond diggers still operating in the Northern Cape, Free State and North West. This is down from more than 1 000 in 2001.
Under the reforms outlined in the Minerals and Petroleum Resources Development Act, which came into being in May last year, diggers can mine an area of 1,5ha or smaller under a relatively simple and inexpensive licensing process.
But mining any larger area requires a mining rights licence. Getting one of these is a costly, complicated and lengthy process and diggers are subject to the same application processes that apply to multinational mining houses.
Bergh says a 1,5ha claim is pointless as it lasts only six months and there is no guarantee that there will be diamonds in the claim.
A mining rights application involves submitting detailed surveying plans, social and labour plans, business plans, (BEE) targets and environmental management plans. The application, with consultants, lawyers and surveyors fees, can cost, in some cases, up to R125 000 to complete and take several months to be processed. Diggers must also guarantee, up front, a further R100 000 for environmental rehabilitation.
Job losses and economic erosion is a certainty for many towns. Locals already believe that, in some communities, up to 90% of people are surviving on state grants.
There is no getting away from racial polarisation in this segment of mining that has been lily-white for so long.
David Mogashoa, of the Small and Medium Miners Association, which caters for black diggers, says: “The government may be wanting to hurt the white diggers, but they are also hurting us. The government does not understand our suffering.”
Mogashoa says black diggers trying to break into the industry may not need to meet BEE criteria, but the government is not considering their battles to access financial resources and their problems of lack of technical capacity.
Kgakgamatso Mookipilo and Jack Seboetsewe received funds to start a business, but a lack of technical expertise and financial support put paid to their ambitions.
Many emerging black diggers are forced to partner with big BEE investment companies, which siphon off their profits.
It all fuels accusations that mining rights are being reserved for the BEE big guns, but Jacinto Rocha, chief director of Mineral Policy at the Minerals and Energy Department denies this. There is a list of BEE partners that the department supplies to diggers when they make their applications, but Rocha says this list merely presents options for the diggers. “They’re welcome to find their own BEE partners, so long as they do it properly.”
Rocha adds that making employees BEE partners is not acceptable, “because the employees will always act like employees”. Rocha also denies that Pretoria is out of touch and says that white diggers are suffering from a case of sour grapes.
“There is still a problem of paternalism in the industry and the diggers in particular are not being truthful about their problems with the licences. We must ask why is it that they keep complaining about two elements: BEE partnerships and the social and labour plans. It is also untrue that the mining reforms are to blame for diggers going out of business. There are many other reasons, such as the strengthening of the rand,” says Rocha.