Date: 01/11/20005
Source: Department of Minerals and Energy
Title: Hendricks: Introduction of Diamonds Amendment Bill in National Assembly
Speech by Minister Lindiwe Hendricks, introducing the Diamonds Amendment Bill at the National Assembly
Madam Speaker, colleagues, honourable members, I table before you the most important Bill my department has introduced in the mining sector, since the Mineral and Petroleum Resources Development Act of 2002; namely the Diamonds Amendment Bill. Allow me to introduce to you the core issues on the Bill we are debating this afternoon.
Most of us are aware of the important role mining has played in South Africa in all respects – political, social and economic. Diamond mining as the pioneer of organised mining in South Africa was the fore runner of other forms of mining, and its role in our country has therefore been significant. Through this Bill, we intend to increase the contribution diamonds will make to our economy by increasing downstream activity.
The problem of being over-reliant on resource mining is typified by what we see in Kimberley today. Kimberley is internationally recognised for its contribution to diamond production; yet we see how the community suffers when the once lucrative mines are decommissioned because of low quantities of diamonds and inaccessible deposits. There was little meaningful development that took place in Kimberley, when by all accounts it had the potential to become one of the wealthiest cities in the world.
While we still have resources in the ground we must ensure that we maximise the benefits they can bring. Honourable members, this legislation seeks to create the framework for downstream value addition and investment in the diamond manufacturing sector.
It is clear from my interaction with Ministers’ of mining from other African countries that we are not alone in our frustrations with the divorce of diamond mining from the other more lucrative aspects of the industry. The positive changes taking place on the African continent allows us to find ways of exploring the downstream side of the diamond industry. There are many synergies to be gained from co-operation with other African diamond producers in areas such as aggregation, developing a unique regional brand and style, specialisation, marketing, etc. It is necessary for these countries to also look at transforming this industry by passing relevant legislation that will enable them to thrive not only in cutting and polishing African diamonds in Africa, but to see diamonds moving from the mines to fingers of consumers.
Indeed, honourable Members, we heard from President Mogae of Botswana last week on the importance of us cooperating in this sector and requesting our support in making aggregation of diamonds possible in Botswana. Through this Bill, by way of a notice in the gazette we can exempt any person or category of persons from offering their rough diamonds for purchase to the State Diamond Trader or the Diamond Export and Exchange Centre. It would therefore be possible to cater for such a request in order to increase regional economic activity and cooperation.
Madam Speaker, during the public hearings and through the media we heard a number of concerns being put forward with regard to this Bill, these include: South Africans do not have the ability to cut, polish and manufacture jewellery from the diamonds we mine; that it is not economically viable to cut and polish diamonds in South Africa; and that diamond producing countries should not become polishers and manufacturers but only concentrate on mining activities which produce the diamonds, leaving the downstream activities to the developed countries.
I have already alluded to problems of focusing only on mining, and do not need to elaborate on the dangers of pursuing an approach that does not encompass the entire value chain.
On the issue of the skills and abilities of South African’s to effectively engage in the downstream side of this industry, we recognise where we come from and know that training will need to take place, and greater levels of investment will be required. We are committed to ensuring our people receive the required training and skills development so that the necessary competencies can be acquired, fortunately we have been in discussions with players from the major diamond centres to support our skills development. We are also fortunate that some major players in the diamond industry have been watching our developments here with great interest with a view to investing in downstream processing. Such investments be it from India, Israel, New York or Antwerp will bring with it the latest technology.
We have also been informed during the hearings about the possible loss of thousands of jobs on the production side should beneficiation be encouraged. I am pleased to hear that the Members of Parliament questioned this position and asked whether assurances could be given that these jobs would be sustained if the Bill is not passed. The response honourable members was no! There are no guarantees on this front. What we can guarantee is that through the successful implementation of this legislation, there will be job gains downstream.
Honourable members, some of the concerns raised are valid while others are nothing but myths that are created by people who do not wish to change the status quo. We have listened to these concerns, and many have been dealt with in the amendments that followed the tabling of this Bill.
One such view that we would like to challenge is the distinction between “Cuttables” and “Non Cuttables”, as we believe this is a non-issue for now. We have yet to be convinced that certain categories of rough diamonds cannot be cut in South Africa. We would like to allow ourselves to compete with Antwerp and even the Indian centres. With investors bringing their technology and expertise, I believe in time we will be able to compete successfully with established players in the industry. We have seen the Indian companies in the sector have followed diamonds where they are, and I do not think there is anything stopping them from coming to South Africa to cut and polish diamonds here, which will see them bring their technology. Therefore, until we have proof that some diamonds are “uncuttable” here in South Africa, we will not discriminate.
Madam Speaker, the objectives of the Diamond Amendment Bill are for us as a country which is one of the largest producer of diamonds in the world, amongst other things, to be able to drive the beneficiation of diamonds; provide for the local supply of diamonds so to ensure that diamonds are beneficiated here in South Africa; to ensure that cutters and tool makers obtain regular supplies of unpolished diamonds; and to create more jobs in the beneficiation of diamonds.
In this regard the Bill:
* Establishes the State Diamond Trader (SDT) which, will acquire and supply unpolished diamonds to local diamond beneficiators and promote the industry through the necessary research, support and development as deemed necessary from time to time. I have to emphasise that the SDT will put whatever portion of the production cycle deemed to support local beneficiation at competitive market price. Because we are confident that we will not compromise the producers, we have built in mechanisms to resolve disputes. * Establishes the Diamond Export and Exchange Centre (DEEC) where all rough diamonds that are to be exported, for control purposes will be channelled so as to allow local producers to buy if they can utilise them. Here, foreigners will be allowed to purchase the goods they want for export purposes. Under certain conditions like when we have an oversupply in South Africa, rough diamonds could be exported directly without being offered to be bought at the DEEC. The regulator has the right to declare any place as a Diamond Export Exchange Centre as it deems fit. Therefore, the DEEC is not a fixed premise that is in Johannesburg but could be premised anywhere the regulator deems fit. We have allowed this flexibility in order not to stifle the industry.
Members will be aware that the export duty that is in the principle Act was supposed to operate as a deterrent against exporting, falls under the jurisdiction of National Treasury. We are engaging them with regards to developing a Money Bill that will run concurrently with the implementation of the adopted amendments to this Bill. We look forward to that Bill being tabled in Parliament early next year.
To conclude Madam Speaker, the regulatory function accompanying the above proposed structures will be conducted by the Diamond and Precious Metals regulator; this structure will replace the existing Diamond Board.
I thank you.
Issued by: Department of Minerals and Energy
01 November 2005
Source: Department of Minerals and Energy
Title: Hendricks: Introduction of Diamonds Amendment Bill in National Assembly
Speech by Minister Lindiwe Hendricks, introducing the Diamonds Amendment Bill at the National Assembly
Madam Speaker, colleagues, honourable members, I table before you the most important Bill my department has introduced in the mining sector, since the Mineral and Petroleum Resources Development Act of 2002; namely the Diamonds Amendment Bill. Allow me to introduce to you the core issues on the Bill we are debating this afternoon.
Most of us are aware of the important role mining has played in South Africa in all respects – political, social and economic. Diamond mining as the pioneer of organised mining in South Africa was the fore runner of other forms of mining, and its role in our country has therefore been significant. Through this Bill, we intend to increase the contribution diamonds will make to our economy by increasing downstream activity.
The problem of being over-reliant on resource mining is typified by what we see in Kimberley today. Kimberley is internationally recognised for its contribution to diamond production; yet we see how the community suffers when the once lucrative mines are decommissioned because of low quantities of diamonds and inaccessible deposits. There was little meaningful development that took place in Kimberley, when by all accounts it had the potential to become one of the wealthiest cities in the world.
While we still have resources in the ground we must ensure that we maximise the benefits they can bring. Honourable members, this legislation seeks to create the framework for downstream value addition and investment in the diamond manufacturing sector.
It is clear from my interaction with Ministers’ of mining from other African countries that we are not alone in our frustrations with the divorce of diamond mining from the other more lucrative aspects of the industry. The positive changes taking place on the African continent allows us to find ways of exploring the downstream side of the diamond industry. There are many synergies to be gained from co-operation with other African diamond producers in areas such as aggregation, developing a unique regional brand and style, specialisation, marketing, etc. It is necessary for these countries to also look at transforming this industry by passing relevant legislation that will enable them to thrive not only in cutting and polishing African diamonds in Africa, but to see diamonds moving from the mines to fingers of consumers.
Indeed, honourable Members, we heard from President Mogae of Botswana last week on the importance of us cooperating in this sector and requesting our support in making aggregation of diamonds possible in Botswana. Through this Bill, by way of a notice in the gazette we can exempt any person or category of persons from offering their rough diamonds for purchase to the State Diamond Trader or the Diamond Export and Exchange Centre. It would therefore be possible to cater for such a request in order to increase regional economic activity and cooperation.
Madam Speaker, during the public hearings and through the media we heard a number of concerns being put forward with regard to this Bill, these include: South Africans do not have the ability to cut, polish and manufacture jewellery from the diamonds we mine; that it is not economically viable to cut and polish diamonds in South Africa; and that diamond producing countries should not become polishers and manufacturers but only concentrate on mining activities which produce the diamonds, leaving the downstream activities to the developed countries.
I have already alluded to problems of focusing only on mining, and do not need to elaborate on the dangers of pursuing an approach that does not encompass the entire value chain.
On the issue of the skills and abilities of South African’s to effectively engage in the downstream side of this industry, we recognise where we come from and know that training will need to take place, and greater levels of investment will be required. We are committed to ensuring our people receive the required training and skills development so that the necessary competencies can be acquired, fortunately we have been in discussions with players from the major diamond centres to support our skills development. We are also fortunate that some major players in the diamond industry have been watching our developments here with great interest with a view to investing in downstream processing. Such investments be it from India, Israel, New York or Antwerp will bring with it the latest technology.
We have also been informed during the hearings about the possible loss of thousands of jobs on the production side should beneficiation be encouraged. I am pleased to hear that the Members of Parliament questioned this position and asked whether assurances could be given that these jobs would be sustained if the Bill is not passed. The response honourable members was no! There are no guarantees on this front. What we can guarantee is that through the successful implementation of this legislation, there will be job gains downstream.
Honourable members, some of the concerns raised are valid while others are nothing but myths that are created by people who do not wish to change the status quo. We have listened to these concerns, and many have been dealt with in the amendments that followed the tabling of this Bill.
One such view that we would like to challenge is the distinction between “Cuttables” and “Non Cuttables”, as we believe this is a non-issue for now. We have yet to be convinced that certain categories of rough diamonds cannot be cut in South Africa. We would like to allow ourselves to compete with Antwerp and even the Indian centres. With investors bringing their technology and expertise, I believe in time we will be able to compete successfully with established players in the industry. We have seen the Indian companies in the sector have followed diamonds where they are, and I do not think there is anything stopping them from coming to South Africa to cut and polish diamonds here, which will see them bring their technology. Therefore, until we have proof that some diamonds are “uncuttable” here in South Africa, we will not discriminate.
Madam Speaker, the objectives of the Diamond Amendment Bill are for us as a country which is one of the largest producer of diamonds in the world, amongst other things, to be able to drive the beneficiation of diamonds; provide for the local supply of diamonds so to ensure that diamonds are beneficiated here in South Africa; to ensure that cutters and tool makers obtain regular supplies of unpolished diamonds; and to create more jobs in the beneficiation of diamonds.
In this regard the Bill:
* Establishes the State Diamond Trader (SDT) which, will acquire and supply unpolished diamonds to local diamond beneficiators and promote the industry through the necessary research, support and development as deemed necessary from time to time. I have to emphasise that the SDT will put whatever portion of the production cycle deemed to support local beneficiation at competitive market price. Because we are confident that we will not compromise the producers, we have built in mechanisms to resolve disputes. * Establishes the Diamond Export and Exchange Centre (DEEC) where all rough diamonds that are to be exported, for control purposes will be channelled so as to allow local producers to buy if they can utilise them. Here, foreigners will be allowed to purchase the goods they want for export purposes. Under certain conditions like when we have an oversupply in South Africa, rough diamonds could be exported directly without being offered to be bought at the DEEC. The regulator has the right to declare any place as a Diamond Export Exchange Centre as it deems fit. Therefore, the DEEC is not a fixed premise that is in Johannesburg but could be premised anywhere the regulator deems fit. We have allowed this flexibility in order not to stifle the industry.
Members will be aware that the export duty that is in the principle Act was supposed to operate as a deterrent against exporting, falls under the jurisdiction of National Treasury. We are engaging them with regards to developing a Money Bill that will run concurrently with the implementation of the adopted amendments to this Bill. We look forward to that Bill being tabled in Parliament early next year.
To conclude Madam Speaker, the regulatory function accompanying the above proposed structures will be conducted by the Diamond and Precious Metals regulator; this structure will replace the existing Diamond Board.
I thank you.
Issued by: Department of Minerals and Energy
01 November 2005
Advertisement
EMAIL THIS ARTICLE SAVE THIS ARTICLE FEEDBACK
To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
