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MINERALS AND ENERGY PORTFOLIO COMMITTEE
12 October 2005
DIAMONDS AMENDMENT BILL: HEARINGS
Documents handed out:
Kimberly Diamond Bourse presentation
Trans Hex Group presentation
Anglo American presentation
Chamber of Mines presentation
De Beers presentation
Various private sector mining companies and the Chamber of Mines provided submissions to the Committee on the Diamonds Amendment Bill. Concerns raised included the potential adverse impact of the extension of the 15% export duty to the industry in general and on marginal mines in particular, the role of the State Diamond Trader in the buying and selling of diamonds, inadequate attention by the Bill on producer issues and potential unintended consequences, insufficient time to consider all aspects of the Bill, forthcoming state regulation of the diamond industry, additional incremental costs that reduced profit margins and the need for further detail on the role of the State Diamond Trader.
Members asked numerous questions including the appropriate forum to debate matters, poor levels of training, the identity of large players within the domestic industry, the capacity of the proposed State Diamond Trader, the usefulness of laser technology in diamond cutting, how the price of rough diamonds was determined, what percentage of local production remained within South Africa, whether adequate time had been allocated to consider all aspects of the Bill, whether the scrapping of the export duty would result in the non-closure of marginal mines, the continued impact of monopolies on transformation initiatives and why the local industry could not facilitate meaningful beneficiation activities.
Kimberly Diamond Bourse presentation
Adv H Lourens (Chairperson) stated that the Bill intended to promote equitable access within the diamond value chain in line with the principles of the Freedom Charter. The presenter provided a definition of equitable access and declared that the Bourse supported the intentions to expand access. The Bourse was created to develop the diamond industry within the Southern African region. A permit to operate had been received from the government. The aims and objectives of the Bourse were elucidated and the types of operations outlined that the Bourse represented. The aims and objectives of the Bourse were encapsulated within the Amendment Bill. Local beneficiation initiatives had to be created. The reasons for the lack of expansion of the industry in South Africa were explained.
Mr Morkel (Progressive Independent Movement) noted that the Bourse supported the objectives of the Bill in general but sought more clarity on certain minor concerns outlined by the Bourse. He asked which forum should be used by the industry to reach consensus on controversial issues. He asked why sufficient levels of consensus had not been obtained in the past.
Mr E Lucas (IFP) asked whether larger diamonds could not be cut in South Africa as they were usually exported to countries such as India. Clarity was sought on the identity and location of dominant players within the industry.
Adv Lourens replied that the Bourse would be undermining its operations by selling diamonds to the State Diamond Trader who would, in turn, supply its competitors. All parties were vying for market space for the cut product. The Bourse was entitled to object to aspects of the Bill that would adversely affect its operations. Independent diamond producers should be able to make direct representations to the Minister within an appropriate forum. Independent producers had different interests to the major producers. Legislation should not prescribe whether diamonds were cut in South Africa or not.
Mr Morkel sought the position of the Bourse on self-regulation or more draconian measures of regulation. He asked whether the Amendment Bill would promote a type of self-regulation and whether the Bourse's concerns were adequately dealt with in the Bill.
Ms N Mathibela (ANC) asked for clarity on the Bourse's position regarding the causes of Aids. She asked for figures on the number of students under training and referred to the poor standard of skills in the industry after many years of effort.
Prof I Mohamed (ANC) asked whether the proposed State Diamond Trader would have the necessary capacity to buy and sell diamonds in an effective manner. He asked whether laser technology would improve the competitiveness of the South African industry. Clarity was sought on the objections to selling diamonds to the State.
Adv Lourens responded that the South African industry was a mature industry that required a "light" approach to regulation. She stated that the law had to be tested in its application in order to determine its efficacy. Poverty within South Africa negatively impacted on efforts to reduce the incidences of Aids. Laser technology could assist in enhancing the competitiveness of the South African diamond cutting industry. Thirty students were involved in training programmes within the Bourse despite a delay in cooperation with the relevant Sector and Education Training Authority (SETA). Restitution of surface land rights to communities without the inclusion of mineral rights caused problems with regard to mining permits. Klerksdorp and the Northern Cape had experienced such problems.
Mr Matlala (ANC) asked in which provinces student training was located and whether plans were in place to spread the scope of training.
Mr E Ngcobo (ANC) sought clarity on any ideas the Bourse had regarding a framework of protection for competitors.
Mr J Combrinck (ANC) asked for further detail on the reasons for unjust control by dominant players as held by the Bourse.
Mr C Kekana (ANC) asked why the Bourse had a cautious approach to the marketing of diamonds.
Adv Lourens responded that the marketing of cut diamonds was a discipline that had been in place for a long time and strong relationships existed between buyers and sellers. New entrants into the market would require significant resources and effort to achieve success. Section 59 referred to privileges being granted to marginally profitable mines. In practice, certain mines that could not be construed as marginally profitable had been granted such privileges. The Bourse had no plans at this stage to expand the training programmes to other regions in which mines did not exist. A written proposal on a suitable mechanism for the protection of competitors had been submitted to the Department of Minerals and Energy’s (DME) legal advisors. The Bourse's objections to the proposals had been placed on record.
The Chairperson stated that the proceedings were a public hearing and the Bourse should not engage in evasive tactics but provide clear-cut answers to questions posed by Members. Clarity was needed on the cautious approach adopted by the Bourse to certain aspects of the Bill.
Adv Lourens responded that the Bourse would follow the implementation of the Bill and evaluate progress accordingly.
The Chairperson reminded Adv Lourens that the Committee consisted of legislators tasked with producing relevant legislation and should not be overlooked or ignored when providing objections to pending legislation.
Mr Ngcobo reiterated that the presenter was engaging in evasive tactics. He asked what type of protection mechanism the Bourse had in mind to protect it from competitors.
The Chairperson asked that the presenter listen carefully to questions posed by Members and not engage in discussion during questions.
Mr Kekana noted that the presentation had been impressive and references to the Freedom Charter were much appreciated. The Bourse should explain the reasons for caution on certain aspects of the Bill such as the role of the State Diamond Trader.
Adv Lourens referred to Clause 70 of the pending Bill that makes provisions for exemptions and proposed that an additional segment be included that exempted an entity that engaged in cutting activities and the production of diamonds from selling diamonds to the State Diamond Trader.
Trans Hex Group presentation.
Mr L Delport (Managing Director) provided detail on the position of Trans Hex regarding aspects of the Bill. The group supported government initiatives to promote equitable access to rough diamonds and establish beneficiation activities at the local level. The group supported the creation of the State Diamond Trader as a means to distribute rough diamonds to polishers and cutters. The proposed 15% export duty would adversely affect the profit margins of mining companies. The group would support attempts to establish black controlled beneficiation initiatives.
Mr Morkel asked what percentage of local rough diamonds remained in South Africa to be used by the local beneficiation industry and what amount was exported. Clarity was sought on factors that determined the price of rough diamonds. He asked how diamonds were sold abroad and what methods were in place. He asked what percentage of local production remained in South Africa.
Ms Mathibela noted that the group had created 2000 jobs in South Africa and asked how the 15% export duty would affect job creation.
Adv H Schmidt (DA) asked whether the group supported the removal of the export duty on rough diamonds.
Prof Mohamed asked whether a site should be established where parcels of diamonds could be selected on their merits.
Mr Delport stated that no middle people were involved in the sales of diamonds. No profits from low-grade diamond mining could be shared with other parties due to the small amount of revenue generated. Parcels of different qualities and sizes of diamonds were created and placed in an auction system. The highest bid would determine the price. The group wanted to contribute towards the job preservation strategy within the industry. Bidders who knew that the 15% export duty would have to be paid would simply bid lower. The group expected that prices would drop by 15% in the short term. The group needed assistance to operate in the present context. The present Bill allowed the State Diamond Trader to pick individual diamonds or groups of stones. The group proposed that the Trader take a representative sample of the production cycle thereby maintaining the integrity of the system. Large stones should be excluded from the Trader in the interim as extensive expertise was needed to evaluate such stones.
Mr Morkel asked what percentage of production remained within South Africa and how the price of rough diamonds was determined. Clarity was sought on the nature of the bidding process and whether a reserve price was involved. Reconciliation was needed between the Department's objectives and the objectives of business entities in terms of the Bill. He asked whether steps could be taken to increase the amount of rough diamonds that remained in South Africa for beneficiation purposes.
Ms Mathibela asked for comment on allegations that the group had avoided levies for cuttable diamonds by classifying them as uncuttable. She asked what role the group could play in fostering development within the SADC region.
Mr Molefe referred to the high levels of unemployment within South Africa and asked why uncuttable diamonds were not used to create more jobs instead of being exported to other countries for beneficiation purposes. The Trader would promote equitable access to rough diamonds and clarity was sought on the position of the group in relation to the role of the Trader.
Adv Schmidt asked whether the group had completed a cost-benefit analysis of the implications of the Bill.
Mr Delport stated that the group sold 30% of rough diamonds to local buyers and less than five percent decided to cut the diamonds in South Africa. The Bill would promote downstream beneficiation and the prices of diamonds would be known to the market. The group promoted the NEPAD initiative by engaging in exploration activities within the region. Any technology that drove down the cost of production would be welcomed. The Bill was not intended to hurt small-scale operators. The pricing strategy should be reviewed to determine the true value of diamonds. Trans Hex would not exist without the current tender system. A cost-benefit analysis had been completed and 12 out of 21 operations could become unworkable as a consequence of the new regulations. The Bill should not promote such an outcome. The group actively sought Black cutters and polishers and some had been found. The increase in beneficiation would result in additional risks for corporations.
Mr Molefe stated that the Bill intended to promote equitable access to diamonds for local businesses. Certain foreign countries had questionable labour laws. South African workers had to be reskilled to facilitate beneficiation opportunities and promote job creation. He asked why the 15% duty was a major issue now as it had existed for some time.
Mr Morkel noted that 70% of low-grade diamonds were exported and asked what percentage was cuttable or uncuttable. The status quo should be altered to reduce the quantities exported.
Mr Delport responded that a debate continued regarding South African labour law. Alterations should be considered to facilitate beneficiation prospects. Many companies had ignored the 15% duty in the past. The number of rough diamonds cut in South Africa could not be determined.
The Chairperson stated that the 15% issue remained controversial and the implications of the Bill would only be determined after implementation.
Anglo American presentation
Mr Tebello Chabana, Head of Regulatory Affairs, stated that Anglo American supported government efforts to increase access to rough diamonds and promote the domestic beneficiation industry. Various concerns concerning the Bill were elucidated including complaints of insufficient time to consider all aspects of the proposed legislation and possible unintended consequences. The Bill was seen to promote State regulation of the diamond industry. The Trader could impact negatively on the diamond market price. The State should not play the dual role of trader and regulator. Additional incremental costs for the diamond industry would have negative implications. A meaningful cost-benefit analysis and regulatory impact assessment had to be undertaken in a collective manner. The 15% duty would render many operations unsustainable. The Bill did not address problems experienced within the domestic cutting industry. The Bill represented a radical departure from previous government policy.
Adv Schmidt asked whether Anglo American felt that the Bill represented a fundamental shift in government’s economic policy.
Mr Morkel asked whether the group was of the opinion that insufficient time had been allowed for comment and deliberation on aspects of the Bill. He asked whether the cost of rough diamonds had increased by 35% which implied that any price increase under 40% would be unsustainable.
Mr Molefe asserted that the Bill sought to avoid elite creation within the mining industry as an alternative to genuine transformation. The group’s commitment to industry restructuring could be questioned in certain instances. Retrenchments had been occurring in the industry prior to the introduction of the Bill. He asked what plans were in place to promote meaningful manufacturing expansion. The group should actively engage in training programmes to produce workers capable of beneficiation. The Bill would alter the current pattern of beneficiaries within the industry as a whole and seek to avoid retrenchments.
Mr S Louw (ANC) asked whether the exportation of South Africa diamonds was contributing to the collective value of overseas companies by allowing the mixing of cuttable and uncuttable stones. He asked whether Anglo American could guarantee that the scrapping of the export duty provision would result in no retrenchments in the short term.
Ms Mathibela asked whether more stones were imported into South Africa than produced locally. She sought clarity on plans to promote beneficiation within the country.
Mr Chabana replied that the current Bill had been published on 30 August 2005 with new developments in certain areas such as the State Diamond Trader and no exemptions for export duties. Inadequate time had been allowed to consider all the implications of the Bill. Certain questions directed at the presenters could not be answered as Anglo American was not involved in diamond production.
Mr Molefe stated that Anglo American controlled 45% of De Beers and were suitably qualified to answer any questions pertaining to the diamond industry. No questions should be avoided.
Mr Chabana responded that the group was merely an investor in the diamond industry and did not manage mine production. The Bill did not address economic issues regarding the manufacturing and cutting of diamonds and sought to address issues at the level of producers. Anglo American could not guarantee that scrapping the 15% export duty would not result in further closure of marginal mines.
The current government economic policy sought to reduce the costs of business in South Africa. However, the Bill would increase the costs for diamond production and cutting in South Africa. The increase in the price of rough diamonds would translate into an increase in costs for cutters. The group estimated a 40% rise in costs. The current Rand exchange rate was not competitive for any export business particularly when this accompanied no shift in the dollar price for commodities.
Mr G Gomwe (Chief Operating Officer) declared that the group maintained a 120 000 strong workforce in South Africa. The Bill only addressed a certain section of the value chain, namely producers. Stakeholders should engage in debate to consider how best to achieve downstream beneficiation. Anglo American had a strong Black Economic Empowerment (BEE) component and contributed extensively to procurement from previously disadvantaged entities.
The Chairperson acknowledged that the downstream beneficiation process was important and access to rough diamonds had to be improved. No shift in government’s economic policy had occurred.
Mr Molefe declared that inadequate BEE programmes were in place in sectors of the industry and the Bill sought to redress the legacies of the past. Public-private partnerships would be promoted to achieve objectives. The Bill should be dealt with holistically without avoiding certain problematic aspects.
Mr Kekana noted that a clear link existed between Anglo American and De Beers and Anglo owned significant shareholding in the wider South African economy. The group had a duty to create jobs in South Africa. Export duty served as a tool for government intervention in the economy to achieve redress. The role of the private sector in promoting development within South African society over the past ten years had to be studied.
Mr Lucas asked what the group had done in the past when the Rand was strong to alleviate socio-economic hardships. Subsidies for overseas mining operations had to be considered. Producers could not choose good diamonds over bad when mining and had to accept what was acquired. The risk of production lay with producers. A team effort was needed to create employment.
Mr Morkel asked whether Anglo had conducted a cost-benefit analysis and regulatory impact assessment of the potential implications of the Bill. He asked what time-factor would be appropriate to affect a meaningful assessment of the Bill.
Mr Chabana replied that the Bill contained no adequate definition of the State Diamond Trader and greater clarity was needed on its envisaged role. Such issues should be formalized in the legislation. The majority of mined diamonds were category three diamonds and high-cost mines could be compromised without an adequate market for such diamonds. A cost-benefit analysis and impact assessment should be conducted by the government and producer mines. Additional incremental costs of an export duty and royalties had to be considered as a negative development.
Mr D Baber (Finance Director) stated that the group had sold off unrelated subsidiaries and was now a core natural resource company. Sales returns had been invested into expansion initiatives in which 30 000 new jobs had been created. De Beers remained an important management component of the group. Anglo America was a public company with substantial Old Mutual and Public Investment Corporation (PIC) investment. A fiduciary programme was in place to safeguard all shareholder interests.
Mr Keaton stated that the Bill should increase employment prospects within cutting without jeopardizing jobs in production.
Chamber of Mines presentation
Mr R Baxter, Chief Economist, provided an appraisal of the implications of the Bill for the mining industry in general. Comment was passed on the introduction of additional operational costs in terms of duties and royalties. The Chamber had engaged in a number of extensive research projects to determine the state of the industry and provide verifiable statistics on economic issues. Attempts at facilitating a downstream beneficiation industry were explained and obstacles highlighted. Competitive manufacturing activities had to be fostered and adequate domestic markets created. The project relied on the imposition of a supportive policy environment within South Africa. The mining industry had made significant strides in the transformation of the industry.
Adv Chaskalson stated that the Bill would impose six new exemptions from export duty. This development had serious consequences for the constitutionality of the Bill. Section 77 (2) of the Constitution stated that money bill provisions should be dealt with separately and not be mixed in Section 75 or Section 76 Bills. Clauses 32 and 33 of the Bill could be struck down through court action following the implementation of the Bill. He asked why the clauses should be included as they merely increased the risk of legal action by elements of the cutting industry. A separate money bill should be devised to address the issues.
Mr Kekana asked why Anglo American could also not be involved in the promotion of manufacturing within the mining industry. Africa in general required increased levels of development to offset established forms of mineral exploitation by foreign-based interest groups. Manufacturing would create jobs and reduce prices of finished products through competition.
Mr Morkel asked for the source of statistics presented as a clear pattern was emerging. Further study was needed to verify existing statistics. He asked where the responsibility lay to improve the validity of research findings. The appropriate forum to debate the possible outcomes of the Bill such as the need to avoid job losses in other areas had to be identified.
Mr Lucas stated that training was needed to produce the necessary skills to attract manufacturing endeavors. A plan was needed to make more use of mineral resources within the domestic market.
Adv Schmidt asked whether the solution lay in a concurrent money bill to address uncertainties over the export duty.
Mr Baxter responded that diversification had existed within Anglo American during the apartheid years due to economic sanctions in the main. Globalisation and democracy had effected changes in this regard. The manufacturing sector in South Africa had shrunk in relation to its contribution to Gross Domestic Product. However, the creation of an enabling environment through effective government policy would assist in promoting manufacturing activity. A collective grouping comprising relevant departments, National Treasury and other stakeholders could develop terms of reference to drive sound research initiatives. Development clusters for manufacturing required markets to grow and a high export percentage was necessary. Competitive products had to be produced.
Adv Chaskalson stated that the Bill would impose an export duty as Sections 63 and 64 of the principal Act would be amended. New duties would be imposed on a range of new situations. The Constitution would regard the Bill as a money bill. A parallel bill was needed to remove any risk of unconstitutionality.
The Chairperson asked why diversification could not exist now as a solution to job creation requirements and address the challenges of depleting resources.
Mr Matlala asked whether the Chamber had a broad development strategy in place to meet socio-economic needs. Clarity was sought on labour costs with reference to cuttable and uncuttable diamonds.
Mr Combrinck asked which diamond companies were members of the Chamber.
Mr Molefe stated that public-private partnerships were needed and mining companies had to consider alternative manufacturing strategies to address social issues. He asked whether the will existed to transform the mining industry. Companies had to consider human resource development. Access into the industry had to be promoted. The Bill should not be blamed for retrenchments.
Mr Ngcobo stated that centers of excellence required significant funds from the private sector to render meaningful service. The presence of monopolies within the diamond industry could have an adverse impact on attempts to create small and medium sized enterprises. The role of the private sector in public-private partnerships had to be evaluated. Legislation was required to extract resources from the private sector to facilitate state intervention in redressing past imbalances. The proposed export duty would serve this purpose.
Mr Louw stated that the Department had to respond next week to attempts by the private sector to remove section 59 from the legislation. Issues relating to the money bill could be set aside but Members had to debate all aspects of the Bill with the Department. He asked why the mining sector could not create employment across the spectrum as certain mining companies had succeeded in generating employment.
Ms Mathibela asked why mining companies feared the 15% export duty so much. Clarity was sought on the role of the Chamber of Mines in employment creation initiatives and whether plans existed to counter the claimed adverse implications of the Bill.
The Chairperson asked whether spontaneous market beneficiation existed as claimed in the presentation and which groups were responsible for fostering beneficiation endeavors.
Mr Baxter replied that the promotion of beneficiation initiatives relied on significant fixed investment from groups qualified to create such activities. An appropriate investment climate had to be put in place. A broad strategy for beneficiation had been formulated and certain private companies engaged in financial support for downstream activities. The imposition of a 15% duty would not assist in the expansion of a diamond cutting and polishing industry within South Africa. The diamond company members of the Chamber were De Beers, Trans Hex, Namaqua Diamonds and SADPO (South African Diamond Producers Organisation). The mining industry had played a leading role in the transformation of the industry. Legislative focus on production issues would not generate the desired effects on the downstream value chain. 25% of mining industry management originated from the previously disadvantaged community. The Chamber represented the mining industry in a transparent manner. An invitation was extended to the Committee to visit the Chamber in the near future. An independent study was required to verify research findings. The industry invested R1 billion annually in skills development and between R5 and R10 billion of business was procured from previously disadvantaged businesses. Extensive capital investment programmes were in place.
Adv Chaskalson reiterated that the Constitution required money bills to be separate from other pieces of legislation.
Mr Baxter declared that skills were needed to enable South African companies to compete on a global basis. Labour productivity had to increase and a conducive business environment had to be created to attract beneficiators. The 15% duty would have an adverse impact on all mining producers. Projects to support spontaneous beneficiation were in place but an adequate market was required to support initiatives. A cluster-based approach was necessary to resolve outstanding issues.
De Beers presentation
Mr G Penny (CEO) stated that section 59 of the Bill was flawed and could be improved. De Beers followed the legal process to the letter. One flawed system should not be replaced by another. Concerns regarding the pending legislation were voiced and proposals were put forward to address the controversial issues. Skills and capacity building within the industry was key to achieving the desired results. De Beers supported government initiatives to transform the industry by means of the Bill. Equitable access to rough diamonds should be promoted. The 15% duty would have a negative effect on mine profitability and the viability of marginal mines would be severely compromised. The levels of supply to the State Diamond Trader had to be specified clearly to foster stability. The diamond industry depended on continued high demand and consumer confidence to maintain growth. The company supported initiatives to promote local beneficiation enterprises. Manufacturers relied on consistency of supply and the Bill could affect this negatively. Six initiatives to change the diamond industry were elucidated.
Adv Schmidt asked whether the percentage to be supplied to the Trader would be determined by the Minister or fixed in the legislation. He asked whether rough diamonds were in short supply or whether supply was affected by high prices.
Mr Ngcobo referred to demand for diamonds growing at 6% per annum that contributed to high diamond prices and asked why the 15% duty would close marginal mines in the face of a sound business environment. He asked why De Beers would build a new Head Office in Botswana and not South Africa. He asked who made the distinction between cuttable and uncuttable diamonds. Clarity was sought on the history of De Beers in implementing Section 59 and allegations of evasion of duties in the past. He asked whether a framework was in place to support SADC countries and Nepad.
Mr Lucas added that Members had to know the progress made by De Beers in public-private partnerships. A South African middle class had to be created to provide an adequate market for diamonds.
Ms B Tinto (ANC) asked when the mining industry would make a concerted effort to create employment opportunities in South Africa and discontinue the exportation of much-needed jobs. She claimed that South African consumers featured as an after thought in marketing campaigns. South Africa should develop extensive beneficiation enterprises.
Mr Morkel noted that a new De Beers had emerged from the presentation focused on development but further clarity was required on transformation plans. He asked which forum was appropriate to engage in further debate over the merits and demerits of the Bill. He asked whether De Beers would contemplate legal action after the implementation of the Bill in relation to the export duty. The position of De Beers vis-a-vis the general objectives of the Bill had to be clarified.
Mr Louw asked whether De Beers could guarantee no further closure of mines if the 15% duty was scrapped. He asked why South African diamonds were mixed in London and then returned to the country. De Beers’ commitment to the development of local beneficiation had to be clarified.
Ms R Kainyah (Executive Director) responded that the percentage of diamonds to be sold to the Trader had to be clearly stated in the Bill.
Mr Perry stated that demand had to continue to exceed supply to maintain sufficient levels of value in the industry. Diamonds had to be placed in the most productive hands to generate growth in downstream industries. The high demand would result in high rough diamond prices. Constant marketing activity was needed to maintain optimum levels of demand. The advent of synthetic diamonds would present a challenge to genuine stones and an innovative marketing campaign would be required to counter the threat. The relocation to Botswana was premised on the role that that country played in diamond production. De Beers had carefully followed the stipulations of Section 59 since its introduction in 1986. All exports had authority from the SA Diamond Board.
Mr Noko said that the 15% duty would have an adverse impact on marginal mines. Profit margins were used to determine the definition of marginal mines with the threshold fixed at 10% or less of profit over revenue. The addition of the 15% duty would result in a loss of income. Other factors such as low-grade resources, old mines and high operating costs could also cause closure.
Ms Kainyah admitted that job creation in South Africa would promote the domestic diamond market. The marketing campaign for the domestic market was not an afterthought but was taken seriously by management. A network had to be created within the region to assist entrepreneurs and others seeking to establish beneficiation. The State Diamond Trader should determine which diamonds were cuttable or uncuttable to reduce the potential for argument.
Mr Perry declared that De Beers was prepared to work with all stakeholders to produce verifiable statistics on industry conditions. The Regulator had to take the lead in this regard. Members should decide for themselves whether the new De Beers had emerged. De Beers was not opposed to the objectives of the Bill and a number of players could take legal action against aspects of the Bill after implementation. A separate money bill would rectify the situation and reduce the risk of court action. South African diamonds were mixed with other diamonds in London in the same manner without preference. Mines tended to produce resources of variable quality and cutters and polishers liked to merge like with like. The aggregation process created certainty and a consistent supply for the downstream industry. The answer to problems around "sight" holders was the establishment of a Charter with a clear scorecard to avoid accusations of bias. 12 of 19 companies supplied by De Beers had a BEE component.
The meeting was adjourned.
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