VIDEO: Red tape must be cut to allow alluvial diamond sector to create wealth, jobs
Tapping into the earth’s treasures is in the blood of Amo Marengwa. Marengwa’s father, Ben Marengwa, was the first black geologist in South Africa.
After Ben Marengwa passed away in 2007, Amo and his three brothers decided to continue their father’s projects, one of which was mining for alluvial diamonds in the North West village of Taung.
Diamond mining is traditionally associated with big mining operations like De Beers, and involves the mining of kimberlite pipes containing diamonds.
Alluvial mining, however, involves the mining of diamonds that had been washed away from eroding kimberlite pipes and had settled on the bottom of ancient river beds.
Operations now at a standstill in Taung at the site of the Maraweng brothers’ alluvial diamond mining plant. Video: Supplied
Over millennia, the beds dried up and filled with gravel and earth, scattering the precious stones.
There are significant alluvial diamond deposits in Namaqualand, Northern Cape, North West and the northern parts of the Free State.
Although alluvial diamonds account for less than 10% of the diamonds in South Africa, they are renowned for the flawless stones they produce and their high value per carat.
Alluvial diamonds are big business – but risky too. On average, producers must process about 100 tons of dirt to recover just one carat (or 0.2g) of diamond. It’s a high-risk investment business that financiers don’t like.
Consequently, the Marengwas battled to find funding from commercial banks, the Industrial Development Corporation and other developmental agencies. They were forced to use their own savings, then scrambled to find other investors.
But their difficult business journey was made more costly by the legislation of the Department of Mineral Resources (DMR).
One size doesn’t fit all
DMR legislation does not distinguish between a small mine and a large one. So small, family-run mines like the Marengwas are governed by the same mineral policy, regulations, and stringent health and safety standards designed for large-scale mining operations.
These include exorbitant application fees and costly geological studies that accompany them, along with monthly inspections, electrical and hygiene costs.
“Alluvial diamond producers accept the need to work safely and responsibly, but the legislation must be enabling rather than restricting. These regulations might be appropriate for big diamond mining mines, but not for us smaller alluvial operations,” says Amo Marengwa, who now serves on the executive committee of the South African Diamond Producers Organisation (SADPO). The group represents around 130 alluvial diamond mine operators.
A typical alluvial diamond operation employs between 20 and 50 people.
Many alluvial operators have not been able to keep up with the government’s health and safety demands, and have closed down – taking with them over 20 000 jobs.
According to SADPO, there were an estimated 2 000 small diamond companies employing about 25 000 people in 2004. Today, just 5 000 people work at 200 alluvial diamond operations.
“This is the result of a poorly considered policy,” says Marengwa,
Rather than watching their businesses disappear altogether, SADPO wants the government to change its “one size fits all” approach to legislation. The group has submitted a position paper to DMR, outlining practical and concrete steps that must be taken to save the alluvial diamond sector.
Simplify the process
One of SADPO’s recommendations is for the government to simplify the process of applying for mining rights.
“The mere application for a small 5-hectare mining permit – before the applicant has even bought a pick and shovel – costs R150 000. In SADPO’s opinion, this should not cost more than R5 000,” says SADPO chairperson Gert van Niekerk.
The aim, says Marengwa, is to establish a one-stop shop. “I should be able to receive my mining right and water usage licence at the same place, at the same time.”
Include the zama zamas
Poor legislation and over-regulation has also led to a staggering decrease in prospecting applications and the rapid growth of illegal mining.
SADPO wants to include these illegal operators – usually referred to as zama zamas – into the legal and regulatory framework. “The aim is to make the policy and regulations more inclusive to decrease illegal mining,” says Van Niekerk.
Van Niekerk cites the example of an alluvial diamond project in the lower Orange River town of Barken that has successfully incorporated zama zamas into its market production. The formalisation of the zama zamas, says Van Niekerk, ensures that everyone is rewarded for their work.
Workers are paid every 48 hours and the project – which began in December 2020 – has reduced conflict in the town. “It’s a good example of co-existence and the vital role that small diamond producers play in developing rural communities,” says van Niekerk.
Most alluvial deposits are located in rural areas of South Africa’s most impoverished provinces, where unemployment rates top 70%.
“The methods we use to mine diamonds make us a massive job creator,” says Marengwa. Although the alluvial diamond sector produces only 4-5% of the diamonds in South Africa, it supplies almost half of the jobs in the entire diamond industry in South Africa.
Crucially, there are still enough alluvial diamond deposits to last another century.
All that is needed, say SADPO, is for the government to recognise the uniqueness of the alluvial diamond sector and cut the red tape, opening the way for the junior mining sector to create wealth and jobs.