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DBCM may have to sell 10% of production domestically
New law will commence with the passage of the Money Bill
Jun 7 2006 12:00AM
Reference: 470  


De Beers Consolidated Mines (DBCM), the local arm of the De Beers Group, may have to sell a fixed percentage of its diamond production—possibly 10% —to domestic polishing firms, instead of exporting it for “aggregation” and resale along with other De Beers goods through the Diamond Trading Company (DTC) due to a new South African law. David Noko, managing director of DBCM, said that this change would come with the passage of the Money Bill part of the Diamonds Amendment Act, which has not yet been finalized. De Beers Chairman Nicky Oppenheimer said the company supports and has always supported the South African diamond polishing industry, and already supplies it with $600 million worth of rough diamonds a year through its subsidiaries, the DTC and Diamdel—more than is actually produced domestically.

However, he added, a large proportion of the rough produced in South Africa cannot be cut economically within the country—though this proportion is larger by weight than in value terms. He said it costs $15 to $20 per carat to polish diamonds in India as against $60 to $80 per carat in South Africa, with the result that many South African diamond firms end up exporting rough they cannot profitably handle. De Beers will continue to funnel rough to South African cutting firms through the DTC and Diamdel, he added. Meanwhile, under a new agreement between De Beers and the Botswana government, the aggregation process will henceforth be done at an $83 million facility now under construction in that country rather than in London.

The Botswana government put out a press release trumpeting that achievement, along with the renewal of the mining license at Jwaneng, one of the four major mines operated by Debswana, the 50-50 joint venture between De Beers and the Botswana government. All four mines are now licensed through 2029, and the agreement under which Debswana sells its production to the DTC has been renewed for another five years. The Botswana government notes that 15 diamond polishing plants have now received licenses in the country (only four of which are currently operating), and argued that its policies are advancing the cause of beneficiation across the region.

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