SA on track to implement revenue royalty

[mike04456]

If this goes into effect (a big "if"), it will surely increase diamond and jewelry prices:




SA on track to implement revenue royalty

 

[Mara]

so we should buy all our diamonds before 2009?

oh greegg.....

 

[Volred]

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South Africa's finance minister Trevor Manuel, in his budget speech yesterday to the South African Parliament marking the 10th anniversary of the elections that brought Nelson Mandela to power, confirmed that the government were still considering the introduction of a sales based revenue royalty charge.



"However, this will only take effect in 2009, ensuring that the change in tax regime does not interfere with conversion to neworder mineral rights in terms of the Mineral and Petroleum Resources Development Act,"Manuel said.



The announcement of a possible revenue royalty for diamond mining in South Africa at a possible level of 8% caused an outcry in the mining industry, which is suffering the effects on production costs from the strong rand.



Gary Ralfe, De Beers managing director, said that like the rest of the mining industry in South Africa, the company deplored the proposal which puts the royalty on revenue and not on profits.



“It will surely severely impact upon our older and more marginal mines. It will also impact upon investments in important ongoing projects, " he said, adding that a proposed rate of 8% on diamonds was punitive and discriminatory.



The possible royalty, changes in mineral rights and legislation to enforce black participation in companies highlights the significant changes that the South African mining industry will be subject to over the next few years.



The recent management changes announced by De Beers with the appointment of Jonathan Oppenheimer as managing director of DBCM and Gareth Penny as managing director of the DTC, underline the impact that these changes are expected to bring.





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It says it would start in 2009. Right now it just sounds like another way to raise revenue. Alot of things can happen in 5 years. I wouldnt hold my breath about this.

 

[strmrdr]

Cant say I really blame them if they do implement it.
The diamond industries history in africa isnt very nice.