File image
Johannesburg - 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.

Read also: SA's #nuclear ambitions scuppered 

“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.