Our understanding is that one of the central aims of government in enacting the Diamond Amendment Bill is to promote EQUITABLE ACCESS in the diamond value chain. The principle of EQUITABLE ACCESS has it’s roots embedded in the Freedom Charter and has remained a focus of government in policy development throughout the drafting of the BILL OF RIGHTS, the MINERAL AND MINING POLICY WHITE PAPER, the MPRDA and the BEE MINING CHARTER. EQUITABLE ACCESS is defined as access that is just, fair and impartial and therefore it is clear to us why government is determined to promote it so vigorously. We therefore agree wholeheartedly that the long-denied need for equitable access to the country’s minerals can not be delayed any longer.

However, it is not understood why government has failed to promote equitable access to the small marine mining industry and yet is now seeking to promote this imperative within the beneficiation industry in a manner that will further disadvantage the small marine miners.

The small marine mining industry is controlled by two dominant players who own all ten commercially viable shallow water diamond concessions. These are concessions 1a to 4a which are owned by the Alexkor State Owned Enterprise and concessions 5a to 7a and 11a to 13a which are owned by the Trans Hex Group. These two companies are in effect gatekeepers who unilaterally control access to the shallow water diamond resource on their own terms. Unfortunately these terms are in no way linked to the notion of equitable access and are in direct conflict with the letter and spirit of government’s policies by virtue of an approach that seeks to maximize own benefit to the detriment of the small marine miners. This can best be illustrated by the fact that these two concession holders were incapable of mining inshore diamonds profitably without splitting the income, yet expect small marine miners to be profitable on as little as 48% of the income. Compounding the problem for the small miners is the fact that the resource is continually shrinking while operating costs which are born solely by the small miners are escalating. There is not one single shallow water concessionaire today that has either the means or the expertise to mine shallow water diamonds in spite of government’s insistence thereof in terms of the MPRDA.

As stated above, government has our full support for promoting equitable access to rough diamonds in order to establish a thriving local cutting industry. We do however have grave concerns with the inability of the local cutting industry to compete internationally in terms of price, scale and quality. This has been confirmed in the report by the government appointed consultants, Kaiser and Associates. The inescapable conclusion therefore is that miners will be forced to supply discounted rough diamonds, as a significantly cheaper raw material is then the only way that the local cutting industry will be able to compete with it’s international counterparts. The effect of this on the small marine miners will be particularly negative due to the existing challenges in surviving which have in the past two years put many small miners out of business.

During the period from 2001 to 2004, the Alexkor small miners fed over seven hundred and fifty million rands worth of diamonds into the local diamond pipeline which translates roughly into two and a half billion rands worth of retail jewelry. Unfortunately, many of these small miners have subsequently been forced out of business. This figure does not represent the overall contribution made by the west coast small miners. Rather than aggravating an already dire situation for the small miners, government should be investigating ways of improving the industry and creating an environment that is conducive to growth. After all, if the small miners are put out of business, then the contribution they make to the diamond pipeline will be lost and government will defeat it’s own objectives not only with respect to beneficiation but in terms of job creation and business development in the communities adjacent to the inshore diamond resource. It is crucial to understand that the inshore diamond industry is the very foundation of the Alexander Bay and Port Nolloth economies.

The proposed solution must have as its primary aim the intention of maximizing the benefit of the resource for the adjacent communities. In pursuit thereof we propose that a limited but consistent quantity of suitable rough be made available for beneficiation in the towns of Port Nolloth and Alexander Bay. This will help grow the local economy, facilitate skills transfer and create jobs. In addition, the hospitality industry, geo-tourism and other allied industries will benefit.

It needs to be understood however, that Port Nolloth and Alexander Bay are first and foremost mining communities wherein diamonds form the bedrock of the economy and as such it is of cardinal importance to create the best possible environment for growing and developing the shallow marine mining industry. It is worth noting that shallow marine mining is particularly well suited to small business and it is a well known fact that small business entrepreneurship has a vital role to play in the fight against unemployment and the achievement of growth targets in South Africa.

To be able to turn the local diamond resource to account in favour of the local community, all restraints on the maximization of mining profits need to be removed. In this regard we refer to the lack of equitable access, the diamond royalty, the export duty and anti-competitive restrictions in the sales and marketing process. In as much as the South African abalone industry is free to seek out the best market for their product, so to should the diamond industry. We note that government has been very progressive and supportive of small business in the fishing industry.

The above measures will satisfy government’s desire to promote beneficiation while simultaneously unshackling the shallow marine industry and allowing it to play its role of anchor component in the local economy to the full.

The shallow marine mining industry is in a state of rapid decline and we urge government to conduct an investigation into the validity of our concerns and the appropriateness of our recommendations as soon as possible.