A report into small and junior diamond miners provides, for the first time, a glimpse into the “shocking state of the industry and the regulating authority”, says independent diamond producer Lyndon de Meillon.

The ‘Status of the South African Small and Junior Diamond Mining Sector’ report was written by Nelson Mandela University (NMU) geology graduate (MSc) Sinazo Dlakavu and published in August by the Africa Earth Observatory Institute, under the auspices of the NMU.

The report shows that diamond mining in South Africa declined by 55% between 2005 and 2019, in which production slipped from 15.96-million carats to 7.18-million carats, respectively.

The hardest hit areas include Namaqualand on the west coast of South Africa; the Northern Cape, including the historical diamond centre of Kimberley; and the North West province.

De Meillon highlights that the report finds that the estimated number of issued prospecting rights between 2009 and 2018 in the Northern Cape is 136, with the highest number of such rights issued in one year during this period being 21 – in both 2010 and 2017.

The lowest number of prospecting rights issued in one year during the period was five – in 2013.

However, he points out that although the number of prospecting rights increased by seven between 2009 and 2010, it decreased again over the subsequent three-year period.

After 2013, the number of issued prospecting rights followed a volatile trend between consecutive years.

In terms of mining permits, the report finds that, in the Northern Cape, such permits totalled 655 between 2004 and 2019.

The highest number of mining permits in the province issued in one year during this period was 149 – in 2006; while the lowest number of such permits issued in the period was six – in 2016.

De Meillon points out that the number of mining permits increased between 2004 (11), and 2006 (149), but has been decreasing since.

NORTH WEST

The report also finds that the number of issued mining rights in the Northern Cape between 2005 and 2018 was 78, with the highest number of such rights issued in one year during this period being 16 – in 2010.

The lowest number of mining rights issued in the province in one year during this period is two – in 2005, 2013 and 2016; while the number of mining rights increased between 2005 and 2010 and generally decreased thereafter.

As for prospecting rights issued in the North West, the report finds that the approximate total number issued between 2013 and 2019 was 149.

The highest number of such rights issued in one year during this period was 44 – in 2018; while the lowest number issued in one year during this period was six – between 2013 and 2018.

He states that about 90% of the companies involved with alluvial diamond mining have been lost over the past 17 years.

De Meillon hopes the report will help the industry convey the seriousness of the decline in the small and junior diamond mining and prospecting industry, and form a basis for future regulations and legislation in an effort to ease pressure on the industry.

“From this report, it is clear the biggest reason for the decline in the industry is a failure of the current policy framework,” he says.

South African Diamond Producers Organisation (SADPO) chairperson Gert van Niekerk says the scientific facts of the report provides a tool that SADPO can use in terms of its negotiations with the legislative and regulatory bodies and help in the understanding of the unique characteristics of the sector.

“We trust that the study, going forward, will help us tremendously in getting the legislative and regulatory bodies to adjust [their policies and understanding of the industry],” he says.

Van Niekerk adds that, although there is new legislation proposed for the artisanal and small-scale mining sector, any new legislation and policy should be commodity-specific, because the “one-size-fits-all approach” has not worked for smaller role-players.

“We urgently need to create an enabling environment that encourages investment in the industry. We need to start prospecting again. But the statistics clearly show that the current regulations are not acceptable to investors,” says De Meillon.

He adds that the decline in the sector is “very sad” because the report shows South Africa has millions of tonnes of available diamondiferous alluvial gravel that can be mined, but that is not being exploited under the current mineral policy.

“There has to be policy certainty. There are too many uncertainties in the current policy and Mining Charters at the moment. The current policies are not suitable for smaller role-players and the costs of compliance are too high,” says De Meillon.

In this regard, he says, the average compliance cost is about 5% of turnover for small and junior companies, whereas for large miners the cost of compliance will be much lower.