Independent SA diamond firms seek to block new law

By: Reuters

Published: 21 Dec 07 - 16:35

A group representing independent diamond producers in South Africa is taking the government to court to prevent new diamond laws from coming into effect, arguing they could be bankrupt by them.

The South African Diamond Producers Organisation (SADPO) on Friday served papers on the country's Minerals and Energy Minister, Buyelwa Sonjica, the group's chairman said.

SADPO's head said some 200 independent miners -- who collectively are the second largest producers of diamonds per carat in South Africa after the world's largest producer of the gems, De Beers -- risked being put out of business.

"The court action is to set aside the coming into operation of the first and second Diamond Amendment Act, specifically because they take away the international value of our products," Mattie Lotter, SADPO chairman told Reuters.

"The consequence of the new law is that it further marginalises small producers. If we don't have an international value attached to our product, which the law provides for bigger companies such as De Beers, then some of us will go out of business," Lotter said.

It was not clear when the case would be heard.

Officials at the minerals and energy department were not immediately available to comment. Officials have in the past said they law was expected to take effect soon.

SADPO represents small alluvial diamond producers from the Northern Cape Province, North West Province and Free State Province, and they collectively produced 360 000 carats during the 2006/07 fiscal year.

The group's members have dwindled from 1 000 independent producers in 2002 to about 200 today, he said.

The first and second Diamond Amendment Act of 2005 brings in a range of new provisions, such as requiring diamond producers to offer a percentage of all diamonds produced in a production cycle to the State Diamond Trader.

Edited by: Creamer Media Reporter