De Beers taking Minerals Minister to court over bewildering diamond export obfuscation

Photo by Duane Daws
De Beers Consolidated Mines taking Minerals Minister Mosebenzi Zwane to court.

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31ST MAY 2017

BY: MARTIN CREAMER
CREAMER MEDIA EDITOR

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JOHANNESBURG (miningweekly.com) – The South African government is refusing to grant an exemption to diamond miningcompany De Beers Consolidated Mines (DBCM) relating to the exportation of diamonds to neighbouring Botswana for aggregation, MiningWeekly Online can today report.

Aggregation is the process of mixing like-for-like rough diamonds from mines in South Africa, Botswana, Namibia and Canada.

Up to now, DBSA has received exemption yearly and once the aggregation process is complete, rough diamonds of higher value are re-imported back into South Africa for cutting and polishing, a diamond beneficiation exercise that provides jobs and adds value.

But Minerals Minister Mosebenzi Zwane has denied De Beers an exemption to enable this, despite the company exceeding all the legislated criteria for its 2017/18 levy exemption application. 

As a consequence, De Beers RSA has approached the Pretoria High Court to set aside the Minister’s decision.

At last week’s annual general meeting of the Chamber of Mines, CEO Roger Baxter made the point that resorting to the courts by the mining industry should be seen as a legitimate process to arrive at outcomes that are in the national interest.

“One thing that you’ll see from the industry side in the last two years is that we’re not shy to engage government in court processes, because courts are there to protect our rights and to enforce our rights,” said  Baxter, adding that the same route was also open to government.

While De Beers RSA must sell at least R3-billion worth of rough diamonds, 40% of them to South African diamond cutters and polishers, to qualify for the exemption in terms of Section 74 of the Diamond Export Levy Act, it actually more than trebled the required total sales level to R9.47-billion in the 12 months in question, with 43.3% going to local cutters and polishers – but it has had its levy exemption application turned down in spite of doing far more than the law demands.

De Beers’ South African sightholders employ more than 300 people in their cutting and polishing factories, representing 80% of the total local employment numbers, but sustaining employment at this level is dependent on local companies being able to access higher value rough diamonds from aggregated international production, which facilitates the running of viable businesses.

Section 74 was developed by the South African government to incentivise large diamond producers to support diamond manufacturing in South Africa, which it has succeeded in doing.

But Mining Weekly Online now understands that the enforcement of the 5% export levy, as a result of not being granted the Section 74 exemption, will have a further and dire consequence on DBCM's cash flow challenges.

De Beers – an Anglo American company – is currently investing $2-billion in the development of the Venetia underground diamond mine in Limpopo; through its Shining Light Jewellery Competition it brings new entrants into the South African jewellery industry; and through the establishment of the Kimberley International Diamond and Jewellery Academy it develops cutting and polishing skills.

In addition, De Beers last year launched a programme to mentor five small diamond cutting and polishing businesses, three of which are female-owned, in support of South Africa’s broad-based black economic empowerment objectives.

The company also provides these small cutters and polishers with aggregated rough diamond supply. 

News of the bewildering Ministerial obfuscation arises at a time of increased financial stress in diamond mining circles. As reported by Mining Weekly Online, three Northern Cape subsidiaries of the Vancouver- and Johannesburg-listed Rockwell Diamonds are in business rescue after facing a liquidation application; Johannesburg-listed Trans Hex has put its Northern Cape Bloeddrif diamond operation on care and maintenance to alleviate financial strain; and Lace diamond mine in the Free State, held on the London-Aim by DiamondCorp, is in business rescue.

Now cash flow position of DBCM is being reduced by an export levy exemption being unexpectedly declined, necessitating work having to be done on the studying of options to mitigate the impact of the Minister's decision on sightholders, the local diamond beneficiation industry and DBCM itself. 

De Beers taking Minerals Minister to court over bewildering diamond export obfuscation

Unusual Activity Spotted in BOTSWANA DIAMONDS (BOD.L)

Geneva Contributor | May 31, 2017

Shares of BOTSWANA DIAMONDS (BOD.L) have seen the needle move -3.13% or -0.05 in the most recent session. The LSE listed company saw a recent bid of $1.55 on 650000 volume. 

Deep diving into the technical levels for BOTSWANA DIAMONDS (BOD.L), we note that the equity currently has a 14-day Commodity Channel Index (CCI) of 14.12. Active investors may choose to use this technical indicator as a stock evaluation tool. Used as a coincident indicator, the CCI reading above +100 would reflect strong price action which may signal an uptrend. On the flip side, a reading below -100 may signal a downtrend reflecting weak price action. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal.

BOTSWANA DIAMONDS’s Williams Percent Range or 14 day Williams %R currently sits at -51.72. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would point to an overbought situation. A reading from -80 to -100 would signal an oversold situation. The Williams %R was developed by Larry Williams. This is a momentum indicator that is the inverse of the Fast Stochastic Oscillator.

Currently, the 14-day ADX for BOTSWANA DIAMONDS (BOD.L) is sitting at 17.45. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend.

The RSI, or Relative Strength Index, is a widely used technical momentum indicator that compares price movement over time. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold. The RSI may be useful for spotting abnormal price activity and volatility. The RSI oscillates on a scale from 0 to 100. The normal reading of a stock will fall in the range of 30 to 70. A reading over 70 would indicate that the stock is overbought, and possibly overvalued. A reading under 30 may indicate that the stock is oversold, and possibly undervalued. After a recent check, the 14-day RSIfor BOTSWANA DIAMONDS (BOD.L) is currently at 50.74, the 7-day stands at 45.27, and the 3-day is sitting at 22.64.

Investors who have stayed on the sidelines may be considering if the markets will continue to rally higher. Staying vigilant and watching for signs of the next bear may prove to be a crucial element for helping to guide certain portfolio moves. Keeping an eye on historical corrections as well as sentiment and technicals, may help provide the proper insight needed. Investors may be mindful of any meaningful pullback or correction, and they may have a certain percentage in mind for when things seem to be getting out of hand. Cautious optimism may prove to be a profit saver when the bearish winds start to blow. Investors may need to figure out a plan for when to take some profit off the table. Conducting thorough fundamental research on stocks even after they have broken out may help the investor understand the reason behind the move, and whether it is likely to continue or if it is just a temporary spike. 

Unusual Activity Spotted in BOTSWANA DIAMONDS (BOD.L) | Geneva Journal

Botswana's Wilderness Safaris to bid for Air Botswana | Reuters

GABORONE: 29th May 2017 (Reuters - Editors James Macharia and Jane Merriman)

Botswana's largest tourism company, Wilderness Safaris , plans to make a bid for Air Botswana, the country's loss-making national airline which the government wants to privatise.



Botswana put the airline up for sale in February, part of plans to privatise loss-making state-owned companies. The transport department said at the time it would consider full bids for Air Botswana, as well as joint ventures, ownership, franchising and concessions.



In March, Transport Minister Kitso Mokaila said at least 17 companies had expressed interest in Air Botswana, but he did not name them.



Wilderness Safaris said it planned to make a bid when it published its full-year results last week.



The company, which is also listed in Johannesburg, operates 50 luxury resorts across eight African countries and Wilderness Air operates 35 small aircrafts in Botswana, Zimbabwe, Zambia and Namibia mainly catering to tourists.



Botswana, whose main source of wealth is diamonds, has more than 30 state-owned enterprises, most of them loss making, in industries ranging from tourism and power to housing and finance.



Air Botswana operates four domestic routes and also provides cargo and air passenger services to Cape Town and Johannesburg from Gaborone, Francistown and the tourism hubs of Maun and Kasane.



The airline's losses, blamed on a large workforce and an aging fleet, prompted a turnaround plan that includes cutting costs and cancelling unprofitable routes.

Botswana's Wilderness Safaris to bid for Air Botswana | Reuters