If the Diamonds Amendment Bill currently before Parliament is passed in its present form, it will damage the entire industry, from mining houses to jewellery stores, warns Democratic Alliance leader Tony Leon.
Even more alarming is the haste with which the African National Congress is trying to push through the measure, he said on Friday in his weekly newsletter on his party’s SA Today website.
”The [Bill] is ostensibly aimed at encouraging investment in beneficiation processes, such as diamond cutting and polishing and jewellery manufacturing. It also seeks to encourage broad-based black economic empowerment [BEE] in the sector.
”Unfortunately, the reckless, sweeping changes the Bill … proposes will damage the entire industry, from the mine to the jewellery-store window. It will hurt small producers as well as large ones, black investors along with white.”
The Bill proposes a 15% export duty on all diamonds leaving South Africa. It also seeks to introduce a diamond exchange and export control, at which all rough diamonds for export would have to be offered to local buyers first.
Furthermore, it calls for the creation of a state diamond trader to buy rough diamonds, at a volume or value to be determined by the minister of minerals and energy.
This would replace the South African Diamond Board — which is largely made up of industry representatives and funded by levies — with the state-funded and government-dominated South African Diamond and Precious Metals Regulator.
”What is perhaps more alarming than the content of the Diamonds Amendment Bill is the haste with which the ANC is trying to push it through Parliament.
”The Bill was published in the Government Gazette on August 30, and the government only allowed 21 days for public comment, a deadline that the industry complained was far too short for such a major piece of legislation.
”Public submissions to the minerals and energy portfolio committee were held this past week, and the government is now pressing for the Bill to be finalised and passed by November 1, steamrollering any criticism or corrections in its path,” Leon said.
The most immediate and pressing problem with the legislation is what it would do to jobs in the diamond industry.
”The Chamber of Mines has estimated that the potential loss of existing jobs in the mining industry as a result of the Bill could total 8 500. Those loses would far outweigh the 1 00 to 2 000 or so jobs that would be created by investment in beneficiation.
”Furthermore, De Beers … has warned that the export duty would force the closure of five of its seven mines in South Africa: the Kimberley, Koffiefontein, Cullinan, Namaqualand and Oaks mines.”
Small-scale miners have also warned of potential threats to their operations.
”The introduction of so many new state institutions to control the purchase and sale of diamonds represents an unwarranted intrusion of the state into the market.”
Leon said the proposed legislation would almost certainly encourage smuggling by unscrupulous producers. It would also hurt BEE investment in the diamond sector.
”The ANC government is not helping the people; it is helping itself. And it must be stopped. The Diamonds Amendment Bill must be delayed, reopened for comment, and amended.”
The majority of players in the South African diamond industry oppose the measure in its current form, which is reason enough to go back to the drawing board, he said. — Sapa