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South Africa Diamond Law pleases De Beers
Last minute changes in diamond bill leave out controversial export duty issue
By: AFNS
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Nov 9 2005 12:00AM
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Reference: 128  

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South Africa’s Diamond Law was talk of the town for some time now. It was passed on the November 8, 2005 with some changes. De Beers, who stood to lose most, seems pleased with the last minute changes in the Bill. The law seeks to increase the supply of diamonds to local gem cutters to boost the domestic jewellery sector, especially among blacks, and create jobs. “The revised legislation would not prevent the groups marketing arm from pursuing its key strategy of mixing worldwide production centrally,” commented Gareth Penny, to be DeBeers managing director, at a diamond conference in Namibia. Mining Group Anglo American who owns 45% of the firm had warned of the possible demise of its marketing unit, if the Diamonds Amendment Bill was passed. "We were pleased with the process... the main suggestions that were put forward were incorporated by the committee," Penny said. "The law does not preclude us from operating an aggregated business model."

De Beers strongly objected to the 15% export duty, which would make some low-quality production uneconomic and possibly lead to mine closures. The export duty clause will be considered separately in legislation by the Treasury. De Beers hopes the duty law will include exemptions so that small diamonds not viable to polish in South Africa can be exported. "The bill will be conditional on the passage of the money bill, which is of course extremely crucial to ensure that appropriate exemptions are in place ... for goods that cannot be manufactured profitably," Penny said. "We feel that the final outcome is one on which we can certainly cooperate with the department of minerals and energy."

De Beers plans to move its key mixing, or aggregation, centre to Botswana from London. "Were planning to move that down to Botswana and we have already started the building of the centre there, which is planned to be completed by the end of 2008. All mixing functions will be transferred to Botswana by June 2009," said Varda Shine, to be executive of marketing arm Diamond Trading Company (DTC). The DTC currently ships all its production to London from where a consistent mix is distributed to its specially-selected clients, or sightholders.

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