Jonathan Oppenheimer, chairman, De Beers
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» Beneficiation debate comes of age: An overview
» Beneficiation thrown to top of agenda
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Mines minister scolds Oppenheimer
David McKay
Posted: Fri, 20 Jul 2007

[miningmx.com] -- COMMENTS by De Beers' Jonathan Oppenheimer that the South African government subsidise diamond beneficiation provoked an extraordinary retaliation from mines minister Buyelwa Sonjica who said the diamond giant should have expressed its concerns privately.

"One moment De Beers commits to beneficiation in this country. Next moment they are sending this message," said Sonjica at the launch in Pretoria today of a mines and minerals development board. "Beneficiation is going to be law in this country."

“We thought that our relationship was open enough for them to approach us if they had these concerns about beneficiation,” Sonjica said.

Speaking at a presentation at the Gordon Institute of Business Science on July 18, Oppenheimer said attempts to boost beneficiation in the diamond industry would not work unless there was a sufficient subsidy to compensate for the higher costs involved. His comments were first reported in Business Day, a South African newspaper.

“Unless the government is determined to subsidise that difference, the net benefit of selling those diamonds locally has to be measured against the net loss,” said Business Day citing Oppenheimer. Polishing costs in sub-Saharan Africa were $70- $100 a carat compared with $6-$8 a carat in India, a country with roughly 1-million people in the industry, he said.

Sonjica said the government would not "back-track on its commitment to promote beneficiation as it played an important role in government’s efforts to create jobs." She was joined in her condemnation of Oppenheimer's comments by the National Union of Mineworkers (NUM), South Africa's largest union.

“We find it strange given their relationship with the government of Botswana where a decision has been taken to promote beneficiation," said Fred Gona, a NUM official. “We see this as pure selfishness from De Beers."

This is hardly the first time prominent private sector personalities have been publicly castigated by government. Tony Trahar and Pieter Cox incurred the wrath of government for identifying economic empowerment as a risk factor.

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Government also expressed its concern at the slow pace of empowerment in the South African mining sector despite a number of transactions in the last three years. A summit was to be organised towards the end of the year to discuss the matter. Access to finance was considered a concern for government.

The minerals and mining development board, to be chaired by Sandile Nogxina, director-general of the minerals and energy department (DME), was created to investigate issues such as decline in investment in the South African mining sector.

The board has also been created to advise the mines minister on sustainable development, the transformation and downscaling of the mining and minerals industry and dispute resolution, the DME said in a statement.