CAPE TOWN, July 25 (Xinhua) -- South African Minister of Mineral Resources Mosebenzi Zwane on Tuesday welcomed a court ruling which affirms the legitimacy of the government's authority to monitor the movement of unpolished diamonds.
The ruling was a positive move for the advancement of transformation of the mining industry, Zwane said.
The Constitutional Court (ConCourt) on Monday declined to confirm a high court order which declared that a section of the Diamond Act was unconstitutional.
Section 20A of the Act, which was put in place in 2007, stated that no licensee may be assisted by a non-licensee during the viewing, purchasing or selling of unpolished diamonds at any place where unpolished diamonds are offered for sale, except at diamond exchange and export centres (DEEC).
The South African Diamond Producers Organization (SADPO) approached the High Court in Pretoria earlier this year to declare the section unconstitutional.
The organization complained that producers and dealers were deprived of 30 percent of the market value of diamonds they sell due to Section 20A of the Diamond Act, which prohibits a key part of the price-forming mechanism: the unlicensed expert assistance.
Without this assistance, producers and dealers were unable to obtain the prices they were previously able to obtain, and suffered a loss of 30 percent compared to the prices they were previously able to obtain, the organization argued.
The High Court in Pretoria ruled in favor of the organization. However, the Department of Mineral Resources, along with the Department of Energy and the South African Diamond, Minerals and Precious Metals Regulator, appealed to the ConCourt, maintaining that the purposes of Section 20A were to tighten the regulation of the diamond trade and to eliminate illegal activities that were occurring in the diamond trade.
In its ruling, the ConCourt said Section 20A of the Diamonds Act is not unconstitutional, thereby effectively putting an end to the illegal practices at tender houses.
The more involvement unlicensed persons were permitted to have in the process of buying, selling and exporting unpolished diamonds, the greater the risk of illegal transactions going unnoticed, the court ruled.
"The highest Court in the land has upheld the transformative provisions in the Diamonds Act, which bodes well for our efforts to sustainably and meaningfully transform the diamonds sector specifically, and the mining industry broadly," Zwane said.
