Giant mining group Anglo American warned on Wednesday that South Africa’s plans to increase the supply of diamonds to local cutters and polishers would affect employment, growth and investment in the sector.
The mining conglomerate spoke during public hearings in Parliament on the proposed Diamond Amendment Bill, which seeks to increase the supply of diamonds domestically.
The new Bill stipulates that mining companies must pay 15% export duty while exporting diamonds overseas, compared with exemptions they currently enjoy.
”The Bill in its present form will have an adverse impact on employment, growth and investment in the mining industry,” said Anglo American’s head of regulatory affairs, Tebello Chabane.
”It will directly discourage further investment in the exploration and mining of diamonds in South Africa,” said Chabane before Parliament’s portfolio committee on minerals and energy responsible for the Bill.
The proposed regulations, according to De Beers, plus the 15% export duty would disturb consistency of flow of diamonds and increase the supply.
”We are not against the Bill, but many of our mines will be faced with enormous challenges … the 15% export duty will have impact on profitability,” said De Beers Diamond Trading Company MD Gareth Penny.
He said increased costs associated with export duty would ”jeopardise viability of marginal mines resulting in job losses”.
The Bill was introduced in Parliament on August 31 and seeks to give the South African government powers to redirect a higher percentage of rough stones to local cutters and polishers.
Meanwhile, Chamber of Mines of South Africa chief economist warned that ”up to 5 000 jobs could be affected by the Bill”.
The Bill is aimed at amending the existing Diamonds Act, passed in 1986, which made no provision for the supply of rough diamonds to local processors.
Even though South Africa is the fourth-largest producer of diamonds after Botswana, Russia and Canada, the value-added cutting and polishing processes are largely carried out outside of its borders.
However, Anglo American told lawmakers that the new Bill ”represents a radical departure from stated government policy and is unlikely to achieve its objectives”.
Anglo American, which has a 45% stake in De Beers, called on Parliament to allow more time for discussions regarding the Bill.
Supporters in the government claim that the enactment of the legislation would help to break down barriers for small jewellers because the supply of rough, or unpolished, diamonds is monopolised by De Beers.
De Beers is estimated to control about 70% of worldwide rough-diamond supplies, and has a highly centralised sales system whereby diamonds from all over the world are sold together in a ”London mix”. — Sapa-AFP