South African government dissatisfied with diamond producers

Diamonds have become a symbol not of status and wealth, but of racial oppression and economic exploitation for many in countries where they are mined. South Africa's ruling party on Monday vowed to press ahead with legislative attempts to take greater control of South Africa's diamonds and weaken the grip of the De Beers giant, dismissing arguments that this could disrupt global markets and lead to job losses.

The Diamonds Amendment Bill seeks to establish a new State Diamond Trader that would be able to buy rough diamonds. It aims to discourage the export of rough diamonds through a 15 percent tax and to promote the domestic cutting and polishing industry, and was likely to pass because it has the ruling African National Congress's backing.

Tensions between the government and the white-dominated mining industry are long-standing. The industry stands accused of exploiting South Africa's natural wealth and resisting moves toward addressing the legacy of apartheid.

In value terms, South Africa is the fourth world's biggest diamond producer, with 2004 production worth some US$1.3 billion. Botswana is the biggest, with production worth US$2.9 billion last year, followed by Russia on US$2.0 billion and Canada on US$1.4 billion.

De Beers, which is 45 percent owned by the AngloAmerican mining conglomerate, controls more than half the diamond trade. Its net profits for 2004 were about 25 percent up over the previous year at US$498 million.

"African countries, with their combined production of diamonds, are nowhere near being the diamond centers of the world," Minerals and Energy Minister Lindiwe Hendricks told a parliamentary committee. She cited the gritty town of Kimberley, the birthplace of South Africa's diamond mining industry, describing it as without "meaningful development to keep the town afloat."

Deputy minerals and energy minister Lulu Xingwana last year accused De Beers of being "lily-white and male dominated." The company recently nominated a new black chief executive, David Noko, who will replace Jonathan Oppenheimer as head of its South African mining operations next year.

In parliament on Monday, Xingwana said she represented a black "constituency which has been excluded for more than a century."

"We have to transform this industry," she said.

She said she had met traders in the Belgian cutting center of Antwerp who voiced frustration at being unable to buy diamonds in South Africa, and had received numerous letters from would-be investors desperate to get a foothold in South Africa.

"Let there be more equitable access," she said.

Minerals and Energy Minister Hendricks said white-dominated mining companies had traditionally tried to discourage South Africa from processing the precious gems and that new legislation was necessary to ensure that the disadvantaged black majority could finally benefit from the country's natural resources.

T.E.