SA Lawmakers Welcome Beneficiation Plan, But Want More Details

South African lawmakers have welcomed plans by the Department of Minerals and Energy to step up the local beneficiation of rough diamonds and precious metals, but said more information would have to be provided to enable them to be certain that changes would have a positive effect on the industry.

Members of Parliament on the portfolio committee on minerals and energy were briefed by a team led by senior Department of Minerals and Energy officials on the objectives of the Diamond Act Amendment Bill and the Precious Metals Beneficiation Bill.

The lawmakers believe that the exact details of how local producers would be encouraged to make more of their raw materials available for local value-added manufacturing of jewelry still had to be provided. They also believe the jewelry manufacturing industry needs to have an input on the legislative proposals.

The draft Diamond Act Amendment Bill did not set down a fixed percentage of production that would have to be allocated to local beneficiators. A proposal last year by Minerals and Energy Minister Phumzile Mlambo-Ngcuka that at least 20 percent should be set aside raised an outcry, leading the department to steer clear of quantifying the amount.

Ministry officials told the lawmakers, however, that the figure to be set by Mlambo-Ngcuka would depend on the ability of the local cutting and polishing industry to absorb rough diamonds.

If the percentage set of the current 14 million carats output a year was too high for the local industry to deal with, it would be cut, and if a higher figure was needed then it would be raised.

The draft bill proposes setting up a state diamond trader and exchange that will buy the amount of rough diamonds set by the minister for local beneficiation, and a state-funded regulator to keep track of the inflow of synthetic diamonds.

The regulator will also oversee the six independent, privately owned diamond trading houses. Export duty will be payable on diamonds not offered to the state diamond trader.

Meanwhile, rough stone cannot be cut in South Africa because workers with the requisite skills are not available might have export duties waived.