[miningmx.com] – Since the State Diamond Trader (SDT) came into existence seven years ago, it has fallen short of its mandate to open up the industry for a broad base of new entrants, the Democratic Alliance (DA) argued today.
The SDT appeared before parliament’s oversight committee on mines today to provide feedback on its beneficiation processes.
The entity is by law allowed to purchase up to 10% of local diamond producers’ run-of-mine goods to sell to local manufacturers. However, it has only managed to buy some 4% of diamonds for beneficiation in the past, Futhi Zikalala, CEO of the SDT, told MPs.
“It’s difficult to give an exact amount of rough diamonds beneficiated in South Africa,’ Zikalala said, “as there is no legislation to compel beneficiators to submit information to us.’
The DA members of the committee put it to Zikalala that the SDT is not facilitating the beneficiation of diamonds in South Africa.
“The SDT has had a negative impact on the diamond cutting and polishing industry,’ the DA’s Hendrik Schmidt, said. “In fact, it has diminished the size of our diamond industry.’
Zikalala acknowledged that the “pace of beneficiation’ was challenging, but said there had been progress. “There may not be impact in the short term, as our focus is on transformation, but we want to make sure the new entrants in the diamond sector have a home in this industry, which they didn’t have previously. They know they can get access to diamonds.’
The SDT was set up some seven years ago to replace the monopoly De Beers had in the mining sector with the added task of growing the participation of historically disadvantaged South Africans.
“But the SDT model doesn’t seem to be working,’ James Lorimer, the DA’s shadow mines minister told Miningmx after the meeting. “I believe it’s merely benefiting a handful of companies and to have an entire state entity just to benefit a small few cannot be justified.
“Every mine has to offer 10% of their run-of-mines to the SDT for purchases. But they can’t even take that up. The entire model seems to be flawed and needs to be revised,’ Lorimer said.
Late last year the SDT angered members of the mining committee for snubbing MPs questions about how many diamonds it sells to whom, Business Day reported. At the time it claimed it was commercially sensitive information.
“There are rumours about special favours for friends,’ Lorimer added. “As soon as something is happening out of the public eye there’s reason for concern. The fact that they didn’t want name their buyers seems to reinforce the idea that something untoward may be going on.’
