Oppenheimer Warns Against Heavy-Handed Beneficiation Legislation

De Beers' Chairman Nicky Oppenheimer has warned the South African government not to be heavy-handed in imposing legislation on mining companies in its attempts to promote beneficiation for fear it could lead to “disengagement” between the government and miners.

 

Speaking to African mining ministers, Oppenheimer said partnerships between governments and the private sector were not always easy but they needed to be open, transparent and reasonable.

"In South Africa, the new Minerals Act together with its Charter, forces this interaction which I much applaud," Oppenheimer said. "In this process the government is always the senior partner and carries the largest knobkerrie, but it is a stick that needs to be used very infrequently. The mining companies know it is there and will act accordingly, but frequent clubbing will lead to disengagement which will be in neither interest."

Oppenheimer said southern African countries should insist miners operate in a way that brings the maximum benefits to their peoples but hinted they should be realistic in their demands.

As an example, he said that although South Africa had established a viable cutting and polishing industry, it could not polish all the country's diamond production since it costs $40-$50 to polish a carat of rough diamonds while in India the equivalent work costs $10-$12.

“This means that only larger, better quality diamonds can be polished in South Africa,” Oppenheimer said. "All diamonds that can be economically cut in South Africa are offered to the South African industry. De Beers plays a constructive part of this process and currently supplies, in value terms, more than the South African production of these sizes and qualities to its clients here in South Africa."

He said the industry needed to "transform itself to fit into the new South Africa" and De Beers was committed to helping bring about the required change in consultation with the government.

De Beers was also looking to see what could be done to create "forever" benefits to other African producer countries and pointed to Sierra Leone as an instance of what can happen when the partnership between governments and miners breaks down.

Meanwhile, in a reference to Namdeb, Oppenheimer said De Beers' partnership with Namibia, "will be taken another step forward" this year as the sides negotiated the renewal of their sales agreement. "As part of this process I am sure we will be discussing all aspects of the diamond business, including cutting and polishing."