SA National Assembly Approves Diamond Bill Amendments

South Africa's national assembly approved the Diamond Amendment Bill today (Tuesday). The Bill aims to update the existing Diamond Bill and promote black South Africans.

Among other changes, the controversial Bill calls for the creation of a State Diamond Trader (SDT). Local diamond miners will be required to sell some of their production to the SDT, but at this point it is not clear how much.

During a speech in Israel on Sunday, DTC Managing Director Designate Varda Shine said the company expects the requirement to 10 – 15% of production.

Much of the rest of production, according to the Amendment, should be offered on the South African diamond bourse to rough diamond traders and polishers.

The country wants to transform itself into an international diamond cutting center and trading hub and create more jobs for what it calls Historically Disadvantaged South Africans. If the move will create the hoped for change, and to what extent, is far from being clear. Miners fear the change will not benefit Africa, but rather create expensive rough diamonds.

South Africa’s largest diamond miner De Beers, between a (rough) rock and a hard place, says it supports benefication and local manufacturing efforts, but is shaking its head at the math. With five out of its seven diamond mines losing money on one hand and expensive polishing on the other, it is trying to encourage the country to lower the 15% export tax and talks about a local diamond brand.

The branding effort, says Shine, will compensate the difference in price between SA’s polished diamonds and India with its much cheaper labor force.

With the help of De Beers, the State Diamond Trader might not come to be either. According to South Africa’s State Diamond Board Chairman Abbey Chikane, who also spoke with Israeli traders on Sunday, an offer by De Beers to sell a 50 percent stake in its rough diamond trading company Diamdel might make the need for a state trader redundant.

“Negotiations are going on,” he said, “And if everything will be OK, there will be no need for a State Diamond Trader.”

The bill goes now to the parliament's lower house.