2004

SA Diamond Law Might Drive Industry "Underground"

May 2004

There is a lot of anxiety about a new South African diamond bill, says a report in South Africa’s Business Day.

The bill aims to have more of South Africa’s gems cut locally, just as Canada is requiring of its diamond miners. It would cancel a prior agreement between De Beers and the South African Diamond Board that let De Beers sell its gems through the “sights” in London, and instead, have the goods offered to local cutters first.

Analysts say that if De Beers agrees to its principles, it could have a ripple effect on other producers like Namibia and Botswana, who are going to want their gems cut locally too.

The Diamond Act also introduces a 5% levy on rough diamonds. Traders predicted it could drive the industry “underground,” which is what happened in Russia years ago when it slapped on an export duty.

The bill is not yet final, and De Beers has said it can’t comment while it is still studying its provisions.