Diamond Duty Tax Bill Passed By Parliament May Increase The Price Of Diamond
2005: Diamond Duty Tax Bill Passed By Parliament Is Rejected By De Beers And Africa
De Beers and South Africa are now at odds over a proposed change in South Africa’s mining law that would add a duty to any diamond exported from the country and set up a state-owned diamond trading company.
The bill recently passed the Parliament’s Minerals and Energy Committee, although a controversial 15% duty on rough exports was removed from the draft versions of the bill. The treasury will decide what duty will be charged in legislation later this year.
De Beers has said that the levy could possibly cause mine closures and job losses, and lead to the closure of the Diamond Trading Company, its marketing arm, and its famed "London mix" of stones from its various mines.
De Beers has offered to give the South African government a 50 percent stake in Diamdel, its rough distribution arm, which it claims is the best way to distribute diamonds to local cutting factories. It said the government would get it "free of any consideration." The government said it is considering the proposal.
De Beers also is planning to move its mixing functions to Botswana, where they will open up a new DTC.
In a speech to the South African parliament, Botswana’s president Festus Mogae said that this would "facilitate the supply of rough diamonds for the cutting and polishing enterprises inside South Africa." He appealed to the Parliament to "let your diamonds be aggregated in (Botswana’s capital) Garborone instead of London."
But South Africa’s Mines Minister Lindiwe Hendricks said the legislation was necessary to increase local production in South Africa.
"Some view this amendment as killing the diamond industry," she noted. "We are not killing the goose that laid the golden egg, nor are we nationalizing through the back door. All that we are doing is to transform an industry that has remained the same for a very long time."