The Jewellery Manufacturing Industry welcomes the proposed Precious Metal Bill. We feel that the proposal of jewellers licenses being valid for a five year period and the fact that registers will not be required will ease the administrative burden for jewellers considerably. It is hoped that this is just the first step on the ongoing process of deregulating the jewellery industry.

There are however a number of points which we believe require a little clarity or amendment.

They are as follows:

Inclusions or alterations are in bold print. Exclusions are in brackets.

We propose

1. "authorised dealer" means a person authorised by the National Treasury to deal in gold and precious metals.
2. "semi-fabricated precious metal" means precious metal (or a precious metal alloy) that:

1. has been refined to or beyond 99.95% purity, in the case of gold and to or beyond 99.90% in the case of metals of the platinum group and
2. in either its pure state or having been alloyed is in the form of sheet, tube, wire, grain, plate, strip, rod, castings, pressings, the manufacturing waste there of or such other forms of secondary products as the regulator may approve.

Although it is stated that once precious metals have been refined to a minimum of 99. 95% purity for gold and 99.9% purity for platinum group metal, the subsequent products would be regarded as "semi-fabricated precious metals". The Bill only implies that the waste product generated, such as filings, polishing dust, sandpapers all of which contain small particles of semi-fabricated precious metals would be regarded as semi –fabricated and as such could be recycled by the manufacturing jeweler or a beneficiator. We therefore recommend that the definition be amended accordingly.

We have also recommended that the word "casting" and "pressing" be included in the definition as most commercial jewellery is produced by lost wax casting or pressings and not only wire, plate and strip.

We request the following amendment to:

Page 3 Section 3 Sub Section 3

No person may deliver semi-fabricated precious metals in payment of any debt owed by him or her or any other person in consideration of any service rendered or to be rendered to him or her or any other person.

We request that the paragraph read as follows:

No person other than a person contemplated in sub section 1 may deliver a semi-fabricated precious metal in payment of any debt owed by him or her or any other person in consideration of any service rendered or to be rendered to him or her or any other person.

The jewellers regard their waste products as a form of savings. They collect their filings, sweeps or polishing dust until they need the precious metals that are contained in their waste either for production or to pay a debt. The waste is then sent to a refinery or beneficiator who would recycle and recover the precious metal contained. The precious metals that are recovered are returned to the client in either pure metals, alloys, granules, plate, wire, castings or any other form as requested. The recycling costs and costs involved in producing the new semi-fabricated metals would be deducted from the recovered precious metals. The practice of deducting charges in precious metal for services rendered is standard in the precious metal industry, world wide.

Deduction of precious metal in lieu of charges results in the generation of only two documents
a.) a recycling note which indicates recovery and nett precious metal credit to the jeweller after processing charge
b.) a delivery note which itemises the product actually returned to the jeweler

(Examples addendum1)

If the jeweler cannot use precious metals for payment of charges, the documentation would be as follows:

1. a recycling note indicating the full recovery to be credited to the jeweller .
2. invoice to the jeweller for the recycling fee
3. invoice from the jeweller to beneficiator for precious metal the jeweller needs to sell in order to pay the recycling fee
4. payment by the beneficiator for the precious metals invoiced by the jeweller in order to pay for the refining fee
5. receipt by beneficiator of the precious metal purchased from the jeweller
6. payment of recycling fee by the jeweller to the beneficiator

See addendum 2 for examples of documentation

The nett effect is that the precious metal still ends up with the beneficiator for recycling the jewellers waste, but an incredible amount has been wasted in administration time and documentation.

There is also no negative effect as far as VAT is concerned, as each transaction has an input factor and corresponding output factor.

We request the following addition to:

Page 7 Section 8 Sub Section 2

Addition 2(c)

1. Many products such as gold solder, precious metal chemicals, specialised precious metal components and alloys that are not economically manufactured locally are imported into South Africa by manufacturing jewellers and beneficiators. The smaller businesses should not be forced to make use of an authorised dealer or refinery in order to import these

goods. We believe that forcing small business to use dealers and refineries would increase costs to the importer and be a restrictive trade practice.

2. There is a small but viable trade between South African Beneficiators and manufacturing jewellers in neighbouring countries and abroad. South African beneficiators would hopefully not only continue to grow our export of semi finished precious metals but also be in a position to import their waste product for recycling into new product. The aim of the Bill is after all the growth and development of the local precious metal industry.

We request the following addition:

Page 8 Section 11

Addition 11(c)

1. a commercial document issued by a person contemplated in Section 2 (1) or 3(1) as the case may be and addressed to a person contemplated in Section 2(1) or 3(1) as the case may be in the event that the transportation and conveyance is carried out by the South African Postal Services or a courier company.

Most consignments of semi-fabricated precious metals are dispatched by refineries, beneficiators or jewellers to their clients by means of courier companies or the South African Postal Service. My own company dispatches between 20 and 50 consignments per day to clients throughout South Africa. The Waybill contains both the sender as well as the recipients names, addresses and contact details.

It would be impossible for the person transporting each parcel to have a certified copy of our license for the following reasons:

a.) My own company would require in excess of 5 000 certified copies of our

license per annum

b.) The representative of the courier company that receives the parcel is not the

same person that delivers the parcel.

c.) It is poor security to advise the courier company which parcels contain

Addendum 1 A

Addendum 2 A