Independent South Africa Diamond Firms Under Threat
A group of independent diamond producers in South Africa are fearful new diamond laws will bankrupt them and have decided to take the South African government to court.
Papers were served on the Minerals and Energy Minister, Buyelwa Sonjica by the South African Diamond Producers Organisation (SADPO) on Friday the group’s chairman said.
SADPO’s head stated that 200 independent miners, who together form the second largest diamond producers per carat in SA after the famous DeBeers, are at risk of being put out of business.
“The court action is to set aside the coming into operation of the first and second Diamond Amendment Act, specifically because they take away the international value of our products,” Mattie Lotter, SADPO chairman said.
“The consequence of the new law is that it further marginalizes small producers. If we don’t have an international value attached to our product, which the law provides for bigger companies such as De Beers, then some of us will go out of business,” he continued.
It is not known when the case will be heard but is expected to be in the new year (2008).
No one at the minerals and energy department was available to comment.
SADPO represents around 200 small diamond producers from the Northern Cape, North West and Free State Provinces, and collectively produced around 360,000 carats during the 2006/07 fiscal year.
Lotter stated that the group’s members have dwindled from 1,000 independent producers in 2002 to about 200 today, he said. The first and second Diamond Amendment Act of 2005 requires all diamond producers to offer a percentage of all diamonds produced in a production cycle to the State Diamond Trader. For a large company like DeBeers this would have a nominal effect but for a small trader it could be devastating.