De Beers and South Africa battle over downstream diamond business

De Beers said Wednesday that it offered to give the South African government half of its local sales unit Diamdel to help boost small, black-owned cutting firms, Reuters reports.

It also had plans to create a marketing hub in Botswana by transferring key functions from London, but South African plans to revise its diamond law could block that, De Beers reportedly said in a statement ahead of its testimony on Wednesday in parliament.

In a second statement following its testimony a sent to JCK, the diamond company recommended a series of amendments to the “Diamonds Amendment Bill” that is being debated by the South African government.

De Beers is battling against the government’s plan to stimulate more jewelry manufacturing and gem cutting in South Africa, the world’s fourth-largest diamond producer by value.

De Beers argues that proposals to impose a 15 percent export duty and to force diamond producers to sell stones to a state diamond trader would harm the sector and reduce investment.

The government’s aim to stimulate more black businesses in a sector still largely dominated by whites 11 years after the end of apartheid could be better promoted through Diamdel, it said.

“In order to align Diamdel’s distribution policy more closely with government aims, De Beers has offered government a 50 percent share in Diamdel, free of any consideration,” it reportedly said.

In a statement following its public testimony, De Beers said it suggested that the amended bill include the introduction of a separate and concurrent “Money Bill” to deal with export duty regime and the inclusion of State Diamond Trader regulations.

De Beers has also proposed several initiatives that it says will help ensure the achievement of a successful yet transformed industry under the new legislation. It includes:

* Beneficiation charter and scorecard;
* Client criteria to lead transformation;
* Commitment to supply the local industry;
* Commitment to supply smaller slayers; and
* Strategy to grow the social industry; and

Speaking at the public hearings, Gareth Penny, managing director of the Diamond Trading Company and representative for De Beers S.A. said: “De Beers is a proudly South African company, fully committed to South Africa and to the transformation of society and its development.

“De Beers shares government’s goals of a transformed industry and is fully supportive of the objectives of the Diamonds Amendment Bill. De Beers has, however, concerns over some of the particular measures proposed and believes that deliberation and modification are necessary to ensure that the stated objectives are met, he added.

“We plan to work constructively with Government to address these issues in order to foster a successful yet transformed diamond industry in South Africa.”