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South Africa: No Cut-Price Diamonds - State Trader
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Business Day (Johannesburg)
9 October 2007
Posted to the web 9 October 2007
Wyndham Hartley
Cape Town
The recently established State Diamond Trader would not send the wrong message to the market by discounting diamond prices and creating distortions, its CE, Abbey Chikane, said yesterday.
He was speaking at the signing of an agreement between diamond giant De Beers and the minerals and energy department, under which 10% of rough diamonds in SA will be sold to the state trader for supply to empowerment clients for beneficiation.
At the same event De Beers Consolidated Mines MD David Noko said the company expected to produce about 14,7-million carats this year. He said this would be reduced to 12-million carats next year as a result of operations being disposed of.
Minerals and Energy Minister Buyelwa Sonjica said of the service and licensing agreement with De Beers that she was very happy to have reached "this stage" as diamonds would be available to beneficiators who had not had access before.
South Africans were acquiring the necessary skills in China and elsewhere.
She said the cabinet would consider the beneficiation strategy soon, and it would be in force before the end of the year.
Chikane said the 10% of rough diamonds would be worth about $140m and that the State Diamond Trader would be ready to start trading and supplying diamonds to its clients from January 1.
Sonjica said it was still too early to tell whether a beneficiation threshold, similar to the 10% applied to diamonds, would be applied to all minerals, but it would not be ruled out. She said lessons could be learned from the diamond experience and applied to other minerals. Ways of encouraging investors to beneficiate in SA were being explored.
De Beers director Barend Petersen said the signing of the agreement was "a great day for the industry" and was also reflective of the relationship between the diamond giant and the minerals and energy department. He said De Beers was committed to the State Diamond Trader and its creation was another step on the journey of transformation.
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Noko said De Beers' production this year would be boosted by about 240000 carats from sea mining. The new Voorspoed mine in Free State was also due to start production next year.
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