South African National Assembly minerals and energy portfolio committee has given the Diamonds Amendment Bill — which will set up a state diamond-trading system — the nod.
The Diamonds Amendment Bill, which will also pave the way for a tax on exports of rough diamonds, was significantly unopposed by the official opposition Democratic Alliance — which initially was alarmed at key provisions of the Bill.
The Bill will now go through the parliamentary procedure but a complementary Money Bill applying to the tax on diamond exports is expected to be passed early next year.
African National Congress MP and committee chairperson Nkosinathi Mthethwa said the legislation will not destroy jobs — as argued by some producers — but fuel the downstream diamond-beneficiation environment instead.
He also noted that the DA abstained on the Bill in the committee, rather than voting against it.
Mthethwa said there is a transitional period of a year in which the present systems — including the regulatory Diamonds Board, which the government has argued is dominated by the private-sector producers — will be phased out. A new state diamond trader, which will determine the number of diamonds needed for the local beneficiation industry, will be set up.
“We are giving that process a time to conclude [its business],” he said.
Noting that the Money Bill will also be passed during that time, he said: “We have made the point to our colleagues in finance [portfolio committee] that this is an urgent piece of legislation that we need to pass.”
DA minerals and energy spokesperson Hendrik Schmidt acknowledged there has been a shift in his party’s stance, although he said the parliamentary caucus still needs to consider its final position on the Bill before it comes up in the Assembly. This it will do next Wednesday.
It is expected that the Diamonds Amendment Bill will be passed by the National Assembly before the end of current session in November.
Schmidt said there has been some movement since Monday in the portfolio committee, which deliberated on the Bill following public hearings last week. He said there is the “important issue of granting exemptions” to producers who need not go via an export exchange centre — as envisaged in the Bill — to export raw diamonds.
He said the Bill allows exemptions — as yet unspecified — to be granted by the government to export directly to the international market.
The vexed matter of a 15% duty on exports of rough diamonds is also now to be dealt with by the Money Bill, but his feeling is that the government will set this rate at somewhere between 5% and 10%, “but not at 5%, which some in the industry wanted”.
It is envisaged that the Diamonds Amendment Bill and the Money Bill will be implemented simultaneously. — I-Net Bridge