1 Rough Diamond Dealers Association of SA Rough Diamond Dealers Association of SA Submission on behalf of the Submission on behalf of the Rough Diamond Dealers Association of SA, Rough Diamond Dealers Association of SA, a member of the Diamond and Jewellery a member of the Diamond and Jewellery Federation of SA Federation of SA in relation to the Diamond Amendment in relation to the Diamond Amendment Bill Bill Presented by Presented by Ernie Blom, Vice-Chairman on behalf of Ernie Blom, Vice-Chairman on behalf of Archie Luhlabo, Chairman Archie Luhlabo, Chairman 10 October 2005 10 October 2005
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1 Rough Diamond Dealers Association of SA Rough Diamond Dealers Association of SA Submission on behalf of the Rough Diamond Dealers Association of SA,
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Rough Diamond Dealers Association of SARough Diamond Dealers Association of SA
Submission on behalf of the Submission on behalf of the Rough Diamond Dealers Association of SA, a Rough Diamond Dealers Association of SA, a
member of the Diamond and Jewellery Federation member of the Diamond and Jewellery Federation of SA of SA
in relation to the Diamond Amendment Billin relation to the Diamond Amendment Bill
Presented by Presented by Ernie Blom, Vice-Chairman on behalf of Ernie Blom, Vice-Chairman on behalf of
Archie Luhlabo, ChairmanArchie Luhlabo, Chairman
10 October 200510 October 2005
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In d u s tryS e c re ta ria t
A d v iso ry B o dy
R e ta ile rs W h o lesa le rs M a n ufa c tu re rs
Je w e lle ry C o u n c il
R ou ghD ia m o ndD e a le rs
A ssoc ia tio n o f S A
M a s terD ia m o ndC u tte rs
A ssoc ia tio n o f S A
D ia m o ndD e a le rs
C lu bo f S A
U D A S A
D ia m on d Co u n c il
C h a irm an
D ia m o n d a n d Je w e lle ry F e d era tiono f
S o uth A frica
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Motivation of SubmissionMotivation of Submission
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Role of the RDDA in theRole of the RDDA in theDiamond IndustryDiamond Industry
• RDDA is the one of the most representative RDDA is the one of the most representative organisations in the diamond industry with a organisations in the diamond industry with a proven track record. In this respect we refer proven track record. In this respect we refer you to the pie chart that is indicative of who you to the pie chart that is indicative of who we represent and what our vested interests in we represent and what our vested interests in the industry are.the industry are.
• Our members are key players in the diamond Our members are key players in the diamond industry and uphold the principle of industry and uphold the principle of commission work as we have come to know commission work as we have come to know it.it.
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LICENCES APPROVED FROM 1 APRIL 2004 TO 31 MARCH 2005
15%
82%
2%
1%
0%
DIAMOND CUTTERS
DIAMOND DEALERS
DIAMOND RESEARCHERS
DIAMOND TOOLMAKERS
DIAMOND PRODUCERS
ALL ACTIVE LICENCES UP TO END OF PERIOD 31 MARCH 2005
26%
66%
1%
1%6%
DIAMOND CUTTERS
DIAMOND DEALERS
DIAMOND RESEARCHERS
DIAMOND TOOLMAKERS
DIAMOND PRODUCERS
d
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Definition of ‘dealer’Definition of ‘dealer’
• RDDA’s interpretation of the definition of a RDDA’s interpretation of the definition of a ‘dealer’‘dealer’– The dealer as a primary beneficiator and will The dealer as a primary beneficiator and will
remain a key figure in the advancement of remain a key figure in the advancement of beneficiation in South Africabeneficiation in South Africa
• Legal definition of ‘dealer’Legal definition of ‘dealer’- ‘Dealer’ means the holder of a diamond - ‘Dealer’ means the holder of a diamond dealers licence contemplated in Section 26 (a) dealers licence contemplated in Section 26 (a) and and thatthat person person oror entity, that as a primary entity, that as a primary beneficiary of rough diamonds, may provide beneficiary of rough diamonds, may provide commission work to any diamond commission work to any diamond beneficiaries. beneficiaries.
Representation on the Representation on the SA Diamond SA Diamond RegulatorRegulator must be limited to South must be limited to South Africans only, but should be expanded Africans only, but should be expanded to 17 members whereby the different to 17 members whereby the different interest groups and opinions can be interest groups and opinions can be heard, such as the Rough Diamond heard, such as the Rough Diamond Dealers Association and the Trade Dealers Association and the Trade Unions.Unions.
Representation on the Representation on the State Diamond State Diamond TraderTrader must be limited to South must be limited to South Africans only, but should be expanded Africans only, but should be expanded to 17 members whereby the different to 17 members whereby the different interest groups and opinions can be interest groups and opinions can be heard such as the Rough Diamond heard such as the Rough Diamond Dealers Association and the Trade Dealers Association and the Trade Unions.Unions.
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Validity and renewal of Validity and renewal of Dealers Licences (Section 32)Dealers Licences (Section 32)
• As primary beneficiaries, dealers should As primary beneficiaries, dealers should not be discriminated against and the not be discriminated against and the period of licences must be in line with period of licences must be in line with that of the diamond beneficiatorsthat of the diamond beneficiators
• The renewal period for dealers licences The renewal period for dealers licences should be 5 years.should be 5 years.
• Temporary diamond buyers permit Temporary diamond buyers permit should be limited to a period of 1 week should be limited to a period of 1 week instead of 1 month.instead of 1 month.
Definition of ‘Synthetic Diamonds’ Definition of ‘Synthetic Diamonds’ should include ‘irreversibly treated should include ‘irreversibly treated diamonds’ in line with the current diamonds’ in line with the current trend of the world diamond markettrend of the world diamond market
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Synthetic DiamondsSynthetic Diamonds
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Diamond Producers to offer Diamond Producers to offer unpolished diamonds to State unpolished diamonds to State
Diamond TraderDiamond Trader
It is our sincere hope that the State It is our sincere hope that the State Diamond Trader will have the necessary Diamond Trader will have the necessary capacity and infrastructure to ensure a capacity and infrastructure to ensure a regular and equitable supply of rough regular and equitable supply of rough diamonds to licensees.diamonds to licensees.
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Fines in case of Fines in case of difference of value difference of value
(Section 67)(Section 67)
• By way of illustration and to prove that the By way of illustration and to prove that the valuation of unpolished diamonds is an inexact valuation of unpolished diamonds is an inexact science and that it lends itself to various science and that it lends itself to various subjective pricing, tender results can therefore subjective pricing, tender results can therefore vary enormously – see the next slidevary enormously – see the next slide
• Consensus on valuation of any specific Consensus on valuation of any specific diamond or parcels of diamonds is extremely diamond or parcels of diamonds is extremely rarerare
• Prior to 1987, the imposition of 15% export Prior to 1987, the imposition of 15% export duty led to substantial smuggling activities.duty led to substantial smuggling activities.
• Since the advent of the Diamond Bourse, the Since the advent of the Diamond Bourse, the rough diamonds available to the rough rough diamonds available to the rough diamond market increased substantially diamond market increased substantially because the 15% export duty was no longer because the 15% export duty was no longer applicable.applicable.
• The real threat exists that with the The real threat exists that with the reinstatement of the compulsory 15% export reinstatement of the compulsory 15% export duty, the status quo prior to 1987 could duty, the status quo prior to 1987 could reassert itself.reassert itself.
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Imported Rough DiamondsImported Rough Diamonds
• The Rough Diamond Dealers The Rough Diamond Dealers Association supports the Government’s Association supports the Government’s endeavours to import rough diamonds endeavours to import rough diamonds from other countries, however, the Act from other countries, however, the Act does not make provision for those rough does not make provision for those rough diamonds to be re-exported without diamonds to be re-exported without paying the 15% duty.paying the 15% duty.
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ConclusionConclusion
• Lastly, we wish to reiterate our Lastly, we wish to reiterate our commitment and support to the commitment and support to the Government’s initiative and furthermore Government’s initiative and furthermore confirm our Association’s support for the confirm our Association’s support for the local upliftment of the local industry.local upliftment of the local industry.
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Rough Diamond Dealers Association of SARough Diamond Dealers Association of SA
Submission on behalf of the Submission on behalf of the Rough Diamond Dealers Association of SA Rough Diamond Dealers Association of SA in relation to the Diamond Amendment Billin relation to the Diamond Amendment Bill
Presented by Presented by Ernie Blom, Vice-Chairman on behalf of Ernie Blom, Vice-Chairman on behalf of