1 Rough Diamond Dealers Association of SA Rough Diamond Dealers Association of SA Submission on behalf of the Rough Diamond Dealers Association of SA, a member of the Diamond and Jewellery Federation of SA in relation to the Diamond Amendment Bill Presented by Ernie Blom, Vice-Chairman on behalf of Archie Luhlabo, Chairman 10 October 2005

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3 Motivation of Submission

4 Role of the RDDA in the Diamond Industry RDDA is the one of the most representative organisations in the diamond industry with a proven track record. In this respect we refer you to the pie chart that is indicative of who we represent and what our vested interests in the industry are.RDDA is the one of the most representative organisations in the diamond industry with a proven track record. In this respect we refer you to the pie chart that is indicative of who we represent and what our vested interests in the industry are. Our members are key players in the diamond industry and uphold the principle of commission work as we have come to know it.Our members are key players in the diamond industry and uphold the principle of commission work as we have come to know it.

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6 Definition of ‘dealer’ RDDA’s interpretation of the definition of a ‘dealer’RDDA’s interpretation of the definition of a ‘dealer’ –The dealer as a primary beneficiator and will remain a key figure in the advancement of beneficiation in South Africa Legal definition of ‘dealer’Legal definition of ‘dealer’ - ‘Dealer’ means the holder of a diamond dealers licence contemplated in Section 26 (a) and that person or entity, that as a primary beneficiary of rough diamonds, may provide commission work to any diamond beneficiaries.

7 Representation (Sections 6) Representation on the SA Diamond Regulator must be limited to South Africans only, but should be expanded to 17 members whereby the different interest groups and opinions can be heard, such as the Rough Diamond Dealers Association and the Trade Unions.

8 Representation (Sections 17) Representation on the State Diamond Trader must be limited to South Africans only, but should be expanded to 17 members whereby the different interest groups and opinions can be heard such as the Rough Diamond Dealers Association and the Trade Unions.

9 Validity and renewal of Dealers Licences (Section 32) As primary beneficiaries, dealers should not be discriminated against and the period of licences must be in line with that of the diamond beneficiatorsAs primary beneficiaries, dealers should not be discriminated against and the period of licences must be in line with that of the diamond beneficiators The renewal period for dealers licences should be 5 years.The renewal period for dealers licences should be 5 years. Temporary diamond buyers permit should be limited to a period of 1 week instead of 1 month.Temporary diamond buyers permit should be limited to a period of 1 week instead of 1 month.

10 Synthetic Diamonds (Section 56A) Definition of ‘Synthetic Diamonds’ should include ‘irreversibly treated diamonds’ in line with the current trend of the world diamond market

11 Synthetic Diamonds

12 Diamond Producers to offer unpolished diamonds to State Diamond Trader It is our sincere hope that the State Diamond Trader will have the necessary capacity and infrastructure to ensure a regular and equitable supply of rough diamonds to licensees. It is our sincere hope that the State Diamond Trader will have the necessary capacity and infrastructure to ensure a regular and equitable supply of rough diamonds to licensees.

13 Fines in case of difference of value (Section 67) By way of illustration and to prove that the valuation of unpolished diamonds is an inexact science and that it lends itself to various subjective pricing, tender results can therefore vary enormously – see the next slideBy way of illustration and to prove that the valuation of unpolished diamonds is an inexact science and that it lends itself to various subjective pricing, tender results can therefore vary enormously – see the next slide Consensus on valuation of any specific diamond or parcels of diamonds is extremely rareConsensus on valuation of any specific diamond or parcels of diamonds is extremely rare

14 Tender Results

15 Tender Results

16 The Export Duty The Export Duty Prior to 1987, the imposition of 15% export duty led to substantial smuggling activities. Prior to 1987, the imposition of 15% export duty led to substantial smuggling activities. Since the advent of the Diamond Bourse, the rough diamonds available to the rough diamond market increased substantially because the 15% export duty was no longer applicable.Since the advent of the Diamond Bourse, the rough diamonds available to the rough diamond market increased substantially because the 15% export duty was no longer applicable. The real threat exists that with the reinstatement of the compulsory 15% export duty, the status quo prior to 1987 could reassert itself.The real threat exists that with the reinstatement of the compulsory 15% export duty, the status quo prior to 1987 could reassert itself.

17 Imported Rough Diamonds Imported Rough Diamonds The Rough Diamond Dealers Association supports the Government’s endeavours to import rough diamonds from other countries, however, the Act does not make provision for those rough diamonds to be re-exported without paying the 15% duty. The Rough Diamond Dealers Association supports the Government’s endeavours to import rough diamonds from other countries, however, the Act does not make provision for those rough diamonds to be re-exported without paying the 15% duty.

18 Conclusion Conclusion Lastly, we wish to reiterate our commitment and support to the Government’s initiative and furthermore confirm our Association’s support for the local upliftment of the local industry. Lastly, we wish to reiterate our commitment and support to the Government’s initiative and furthermore confirm our Association’s support for the local upliftment of the local industry.

19 Rough Diamond Dealers Association of SA Submission on behalf of the Rough Diamond Dealers Association of SA in relation to the Diamond Amendment Bill Presented by Ernie Blom, Vice-Chairman on behalf of Archie Luhlabo, Chairman 10 October 2005