A South African bill that would place an 8% royalty on diamonds mined in that country has De Beers questioning the fairness of the proposed legislation.
The government acquired all the country’s mineral rights last year and proposed mining royalty rates of 1-8% of gross sales, depending on the commodity.
“On initial scrutiny, the proposed level of royalty on diamonds appears to be discriminatory when compared with the other proposed royalty rates,” says Gary Ralfe, De Beers’ managing director.
The new royalty scheme includes a rate of 3% on gold, 4% on platinum and 8% on diamonds. The royalties will be phased in over five years.
The government says the royalties are in line with those of other mining countries: Australia has a 7.5% rate on diamonds, and Russia has set an 8% levy.
Shares in several big mining companies fell sharply on the Johannesburg Stock Exchange when the bill was unveiled in late March.
The public and industry will have four weeks to comment on the draft Mineral and Petroleum Royalty Bill before it is submitted to Parliament for hearings in May and June.
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