De Beer’s seeks court or­der over ex­emp­tion

The Star Early Edition - - COMPANIES - Dineo Faku

DE BEER’S, the world’s big­gest di­a­mond pro­ducer by value, has taken the gov­ern­ment to court af­ter re­fus­ing to grant it with an ex­port levy ex­emp­tion for the first time in ten years.

Min­ing Weekly on­line re­ported last week that De Beers had ap­proached the Pre­to­ria High Court to chal­lenge the gov­ern­ment’s re­fusal of the levy ex­emp­tion for ex­port­ing its rough di­a­monds to Botswana.

Ag­gre­ga­tion in­volves mix­ing like to like di­a­monds from South Africa, Botswana and Namibia for sale into the world mar­ket.

De Beers, a sub­sidiary of in­ter­na­tional di­ver­si­fied min­ing gi­ant, An­glo Amer­i­can, has en­joyed the ex­port ex­emp­tion levy since the en­act­ment of the Di­a­mond Ex­port Levy Act in 2008.

“De Beers con­firms that it has ap­proached the Pre­to­ria High Court re­gard­ing the mat­ter of its Sec­tion 74 rough di­a­mond ex­port ex­emp­tion,” the com­pany said.

“Par­al­lel to the court pro­ceed­ings, De Beers is also con­tin­u­ing to seek a so­lu­tion through en­gage­ment di­rectly with the De­part­ment of Min­eral Re­sources (DMR) for the long-term ben­e­fit of the South African di­a­mond in­dus­try,” the com­pany said. “As this is a mat­ter that is be­fore the court, it would be in­ap­pro­pri­ate to com­ment fur­ther,” it said.

In terms of Sec­tion 74 De Beers had to sell R3 bil­lion of its rough di­a­monds lo­cally and had to sup­ply 40 per­cent of its di­a­monds to the cut­ters and pol­ish­ers.

The ex­emp­tion aims to pro­vide local cut­ters with the type of rough di­a­monds they re­quire to cut eco­nom­i­cally in the coun­try. Since 2008 De Beers had re­ceived ex­emp­tion yearly, be­cause once the ag­gre­ga­tion process was com­plete, rough di­a­monds of higher value were re-im­ported back into the coun­try for ben­e­fi­ci­a­tion which pro­vided jobs.

The DMR was not avail­able to com­ment on Fri­day. Peter Leon, the co-chair­per­son and part­ner at Her­bert Smith Free­hills Africa, said on Fri­day that the de­ci­sion sent a poor mes­sage to in­vestors.

Not clear

He also said that it was not clear why gov­ern­ment had de­cided to deny the ex­emp­tion to De Beers when this had not hap­pened be­fore. “De Beers is un­der­stand­ably assert­ing its le­gal rights by ap­proach­ing the courts,” added Leon.

De Beers op­er­ates mines in Botswana, Namibia and Canada. It is con­struct­ing the R29bn Vene­tia Un­der­ground mine, a large open pit mine in Lim­popo. It ex­pects 133 mil­lion tons of ore to be treated over the life of the Vene­tia project, yield­ing an es­ti­mated 94 mil­lion carats.

In pre­vi­ous re­ports De Beers said its rough di­a­mond pro­duc­tion in 2016 de­clined by 5 per­cent to 27.3 mil­lion carats, re­flect­ing the de­ci­sion taken in 2015 to re­duce pro­duc­tion in re­sponse to pre­vail­ing trad­ing con­di­tions.Last month the com­pany re­ported rev­enue of $520m for the fourth sales event of the year.

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