Diamonds Second Amendment Act [No. 30 of 2005]


Government Gazette
REPUBLIC OF SOUTH AFRICA

Vol. 488 Cape Town 14 February 2006 No. 27513
THE PRESIDENCY No. 130 14 February 2006
It is hereby notified that the President has assented to the following Act, which is hereby published for general information:–
No. 30 of 2005: Diamonds Second Amendment Act Act, 2005.

GENERAL EXPLANATORY NOTE:
[ ] Words in bold type in square brackets indicate omissions from existing enactments. Words underlined with a solid line indicate insertions in existing enactments.
(English text signed by the President.) (Assented to 10 February 2006.)
ACT To amend the Diamonds Act, 1986, so as to define certain expressions; to prohibit assistance to licensees by non-licensed persons at any place where unpolished diamonds are offered for sale; to provide anew for the kinds of licences that may be issued by the South African Diamond and Precious Metals Regulator; to provide for the issue of temporary diamond buyers’ permits and certificates which entitle holders thereof to be in possession of unpolished diamonds under certain circumstances; to make fresh provision for the premises on which unpolished diamonds may be dealt in, to require that unpolished diamonds intended for export purposes must first be offered at a diamond exchange and export centre; to extend the powers of the Regulator and of the State Diamond Trader; to require diamond producers to offer a percentage of all diamonds produced in a production cycle to the State Diamond nader ; to require a licensee to retain a register in respect of unpolished diamonds for five years and not only two years; and to repeal certain obsolete provisions; and to provide for matters connected therewith.
E IT ENACTED by the Parliament of the Republic of South Africa, as B follows:- Amendment of section 1 of Act 56 of 1986, as amended by section 1 of Act 28 of 1988, section 1 of Act 22 of 1989 and section 1 of Act 10 of 1991
1. Section 1 of the Diamonds Act, 1986 (hereinafter referred to as the principal Act), 5 is hereby amended-
(a) by the insertion after the definition of “dealer” of the following definition: “ ‘diamond beneficiator’ means a person who holds a licence contemplated in section 26(b) or (e);”; and
(b) by the insertion before the definition of “diamond powder” of the following 10 definition:
“ ‘diamond exchange and export centre’ means a diamond exchange and export centre contemplated in section 59(b);”.
Substitution of section 19 of Act 56 of 1986
2. The following section is hereby substituted for section 19 of the principal Act: 15
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Act No. 30,2005 DIAMONDS SECOND AMENDMENT ACT, 2005
of unpolished diamonds at any place- where unpolished diamonds a r i offered for sale in terms of this Act, except at a diamond exchange and export centre.
(2 ) No holder of a diamond trading house licence referred to in section
“Sale of unpolished diamonds prohibited
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19. (1) No person shall sell any unpolished diamond unless- (a) he or she is a producer; (b) he or she has manufactured that diamond, if it is a synthetic diamond;
or 5 (c) he or she is a dealer; or (d) he or she is the holder of a permit referred to in section [40(l)(u) or
(2) The provisions of subsection (1) shall not be construed so as to authorize such producer[,] or dealer or holder of a permit to sell any 10 unpolished diamond which has come into his or her possession in an unlawful manner.”.
(211 a.
Substitution of section 20 of Act 56 of 1986
3. The following section is hereby substituted for section 20 of the principal Act:
‘‘Purchase of unpolished diamonds prohibited 15
20. No person shall purchase any unpolished diamond unless- (a) he or she is a licensee; or (b) he or she is the holder of a permit referred to in section [40(l)(b)]
W.”. Insertion of section 20A in Act 56 of 1986 20
4. The following section is hereby inserted in the principal Act after section 20:
“Assistance by non-licensed persons prohibited
20A. (1) No licensee mav be assisted bv a non-licensee or holder of a -, ..~ . _ ~ ~ ..~ ..~_. - _ _ _ _ -4 - ~ - ~ - - ~ ~ - - , , ~ ~~. ~~. . permit referred to in section 26(e) during the viewing, purchasing or selling I
Substitution of section 22 of Act 56 of 1986
5. The following section is hereby substituted for section 22 of the principal Act:
“Processing of diamonds prohibited
22. No person shall polish any diamond or crush or set any unpolished
(a) he orshe is a [cutter, tool-maker] diamond beneficiator or researcher; (b) he orshe is an employee acting in the course of his & employment
with that [cutter, tool-maker] diamond beneficiator or researcher; or (c) he or she is authorized thereto in writing by the [Board] Regulator.”.
diamond in any tool, implement or other article unless- 35
Substitution of section 23 of Act 56 of 1986 40
6. The following section is hereby substituted for section 23 of the principal Act:
“Erection and operation of machinery prohibited
23. No person shall erect or operate any qachine designed or adapted for the polishing of diamonds unless- (a) he or she is a [cutter, tool-maker] diamond beneficiator or researcher; 45
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Act No. 30,2005 DIAMONDS SECOND AMENDMENT ACT, 2005
(b) he or she is an employee acting in the course of his e employment with that [cutter, tool-maker] diamond beneficiator or researcher; or
(c) he or she is authorized thereto in writing by the [Board] Regulator.”.
Substitution section 24 of Act 56 of 1986
7. The following section is hereby substituted for section 24 of the principal Act: 5
“Export of unpolished diamonds prohibited
24. No person shall export any unpolished diamond from the Republic unless- (a) he or she is a producer; (b) he or she has manufactured that diamond, if it is a synthetic diamond; 10 (c) he or she is a dealer; or (d) he or she is the holder of a permit referred to in section [40(l)(u) or (c)
or (2)] 26(e) or (h).”.
Substitution of section 26 of Act 56 of 1986
8. The following section is hereby substituted for section 26 of the principal Act: 15
“Kind of licence, and permit and certificate
26. Subject to [the provisions ofl this Chapter, the [Board] Regulator may issue the following licences, permits or certificates, namely- (a) a diamond dealer’s licence entitling the holder to carry on business as
a buyer, seller, importer or exporter of unpolished diamonds; (b) a diamond [cutting] beneficiation licence entitling the holder to polish
diamonds for the purpose of business or trade; (c) a diamond [tool-making] beneficiation licence entitling the holder to
set unpolished diamonds in tools, implements or other articles or to crush or to alter those diamonds for the purpose of such setting or for the purpose of trade;
(d) a diamond research licence entitling the holder to do applied research and tests in connection with diamonds, but not to polish diamonds for the puruose of business or trade:
(e) a temporary diamond buyer’s pinnit entitling a person who does not hold a licence in terms of this section to buy an unpolished diamond from a diamond exchange and export centre;
03 a diamond trading house licence entitling the holder thereof to facilitate the buying and selling of unpolished diamonds locally on premises registered in terms of section 47;
(g) a certificate entitling a person to be in possession of an unpolished diamond obtained in a lawful manner.”.
(h) a permit entitling a person to sell, export or import an unpolished diamond on prescribed conditions.
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Substitution of section 32 of Act 56 of 1986 40
9. The following section is hereby substituted for section 32 of the principal Act:
“Period of validity [of licences] and renewal of licence, permit and certificate
32. (1) Subject to [the provisions ofl subsection (2)[, a licence shall be valid until it is suspended or cancelled in terms of this Chapter.1- (a) a diamond dealer’s licence contemplated in section 26(a) is
period of five years; (b) a diamond beneficiation licence contemplated in section 26(b) or (c) is
valid for a period of five years; (c) a diamond research licence contemplated in section 26(d) is
it is suspended or cancelled in terms of this Chapter;
8 No.28513 GOVERNMENT GAZETTE, 14 FEBRUARY 2006
(b) This Chapter applies with the necessary changes in respect of an application for the renewal of a licence, permit or certificate.
(c) In the event of the death of the holder of a certificate contemplated in section 26(g), his or her lawful successor must apply to the Regulator for the certificate to be endorsed to reflect the change in the holder of that
Act No. 30,2005 DIAMONDS SECOND AMENDMENT ACT, 2005
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(d) a temporary diamond buyer’s permit contemplated in section 26(e) is valid for a period of one month;
(e) a diamond trading house licence contemplated in section 2667 is valid for a period of five years;
(R a certificate contemplated in section 26(g) is valid for a renewable period of 10 years unless the holder of an unpolished diamond disposes of the unpolished diamond, in which case the certificate shall be transferred to the new holder of that unpolished diamond and shall be endorsed by the Regulator to reflect the changes.
(g) a permit contemplated in section 26(h) is valid for such period as the Regulator may determine.
(2) @The poard] Regulator may [authorize the issue of a temporary licence for such period, but not exceeding one year, as the Board may determine1 renew anv licence, Dennit or certificate referred to in section
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26. I15
Substitution of section 44 of Act 56 of 1986
10. The following section is hereby substituted for section 44 of the principal Act:
“Utilization of unregistered premises as [diamond exchanges] & mond trading house prohibited 25
44. No person shall utilize any premises as a [diamond exchange] diamond trading house unless he or she holds a diamond trading house licence and those premises are registered as a [diamond exchange] diamond trading house in terms of this [Chapter] As .” .
Amendment of section 45 of Act 56 of 1986 30
11. Section 45 of the principal Act is hereby amended by the substitution for
“( 1) Any person who desires to [utilize] register any premises as a [diamond exchange] diamond trading house shall apply to the [Board] Regulator in writing for the registration of those premises as a [diamond exchange] diamond trading 35 - house.”.
subsection (1) of the following subsection:
Amendment of section 46 of Act 56 of 1986
12. Section 46 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection:
“(2) The [Board] Regulator may at its discretion grant or refuse an application 40 referred to in section 45, but the [Board] Regulator shall not grant any application if [it is of the opinion]- (a) [that] the applicant [or, where the applicant is a company, any director
thereof or, where the applicant is a close corporation, any member thereof is not a suitable person to utilize the premises as a diamond exchange, or 45 to be involved in such utilization] is not the holder of a diamond trading house licence;
(b) [that an interest which] any person has an interest in the applicant is undesirable;
(c) [that] the premises do not comply with the prescribed requirements; [(d) that the applicant wili probably not be able to exercise in a satisfactory
manner control over the utilization of the premises as a diamond exchange; or]
(e) [that] the registration of the premises as a [diamond exchange] diamond
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trading house will be contrary to the public interest.”. 55
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Act No. 30,2005 DIAMONDS SECOND AMENDMENT ACT, 2005
Substitution of section 48 of Act 56 of 1986
13. The following section is hereby substituted for section 48 of the principal Act:
“Dealings in unpolished diamonds restricted to approved premises
48. (1 ) No producer, manufacturer of synthetic diamonds[,] 2 dealer [or holder of a permit referred to in section 40(l)(u) or (2)] shall sell any unpolished diamond elsewhere than on- (a) the business premises of a licensee; (6) any premises [registered] licensed as a [diamond exchange] dia-
mond trading house in terms of this [Chapter] Act; (bA)the premises of any diamond exchange and export centre established 10
by the Regulator in terms of this Act; (bB) the premises of the State Diamond Trader; or [(c) the premises referred to in subsection (2)(d); or] (d) such other premises as the [Board] Regulator may approve under
section 49 on application in writing by such producer, manufacturer or 15 holder.
(2) No licensee shall receive or purchase any unpolished diamond
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elsewhere than on- (a) the business premises of a licensee; (b) any premises [registered] licensed as a [diamond exchange] 20
mond trading house in terms of this [Chapter] Act; (bA)the premises of any diamond exchange and export centre established
by the Regulator in terms of this Act; (bB) the premises of the State Diamond Trader; or [(c) the premises referred to in subsection (I)(& or] (d) such other premises as the [Board] Regulator may approve under
section 49 on application in writing by the licensee.”.
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Insertion of section 48A in Act 56 of 1986
14. The following section is hereby inserted in the principal Act after section 48:
“Condition for export of unpolished diamonds 30
48A. All unpolished diamonds intended for export purposes must first in the prescribed manner be offered at a diamond exchange and export centre.”.
Substitution of section 50 of Act 56 of 1986
15. The following section is hereby substituted for section 50 of the principal Act: 35
“Processing of diamonds restricted to approved premises
50. (1) Subject to [the provisions ofJ this section, no [cutter, tool-maker] diamond beneficiator or researcher shall polish any diamond or crush or set any unpolished diamond in any tool, implement or other article elsewhere than on his business premises. 40
(2) A [cutter] diamond beneficiator may apply to the [Board] Regulator to polish diamonds on such premises other than his e r business premises and for such period as the [Board] Regulator may approve.
(3) [The provisions of section] Section 49 shall mutatis mutandis apply in respect of an application by a [cutter] diamond beneficiator in terms of 45 subsection (2).”.
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Act No. 30, 2005 DIAMONDS S E O N D AMENDMENT ACT. 2005
Amendment of section 57 of Act 56 of 1986
16. Section 57 of the principal Act is hereby amended- (a) by the substitution for subsection (1) of the following subsection:
“( 1) Every producer, manufacturer of synthetic diamonds, dealer[, cutter or tool-maker] or diamond beneficiator shall keep or cause to be kept the prescribed register, in which shall be entered the prescribed particulars in respect of unpolished diamonds and polished synthetic diamonds.”; and
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(b) by the substitution for subsection (3) of the following subsection: “(3) Every person required to keep a register in terms of subsection (1) 10
shall retain the register for a period of at least [two] five years after the date on which the last entry was recorded therein.”.
Substitution of section 59 of Act 56 of 1986
17. The following sections are hereby substituted for section 59 of the principal Act:
“Functions of Regulator in respect of buying and selling of diamonds 15
59. The Regulator shall- (a) implement, administer and control all matters relating to the purchase,
sale, beneficiation, import and export of diamonds; and (b) establish diamond exchange and export centres, which shall facilitate
the buying, selling, export and import of diamonds and matters 20 connected therewith.
Functions of State Diamond Trader in respect of buying and selling of diamonds
59A. The State Diamond Trader shall- (a) acquire and supply unpolished diamonds to local diamond 25
beneficiators; and (b) promote the diamond industry through the necessary research, support
and development as deemed necessary from time to time.
Diamond producers to offer unpolished diamonds to State Diamond Dader 30
59B. (1) (a) The Minister shall from time to time by notice in the Gazette determine such percentage of diamonds produced in a production cycle as may be required for local beneficiation and that the State Diamond Trade1 may buy.
(b) The percentage contemplated in paragraph (a) may be based on carats and value, and shall be a representative sample of a production cycle of any diamond producer.
(2) At the end of every production cycle a diamond producer shall offer all the unpolished diamonds produced by him or her in that production cycle to the State Diamond Trader and specify the fair market value of those diamonds, to enable the State Diamond Trader to inspect such diamonds for the purpose of selecting diamonds for purchase as contemplated in subsection (1).
(3) The State Diamond Trader has one week after the verification contemplated in subsection ( 5 ) or the fixing of the price in terms of subsection (7) to buy diamonds up to the percentage contemplated in subsection (1).
(4) If the State Diamond Trader fails to buy the diamonds within the period contemplated in subsection (3) the producer may withdraw all his or her diamonds offered in terms of subsection (2) .
(5) The government diamond valuator shall verify the prices specified in terms of subsection (2).
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Act No. 30,2005 DIAMONDS SECOND AMENDMENT ACT, 2005
(6) If the producer and the government diamond valuator cannot agree on the prices, the Regulator shall appoint an independent valuator acceptable to the producer.
(7) The independent valuator shall fix the price of the unpolished diamonds within five working days after appointment, which price shall be regarded as the fair market price of the unpolished diamond in question.
(8) The cost of such independent valuation shall be borne equally by the State Diamond Trader and the producer concerned.
(9) For the purposes of this section ‘production cycle’ means a period mutually agreed upon between the producer concerned and the State Diamond Trader before the commencement of a producer’s operations or before the commencement of a new production cycle, as the case may be.”.
Substitution of section 74 of Act 56 of 1986
18. The following section is hereby substituted for section 74 of the principal Act:
“Exemption from provisions relating to offering or registration of polished or unpolished diamonds
74. The Minister may by notice in the Gazette exempt any person or category of persons from the provision of section 48A, 60 or 70 on such conditions as may be specified in the notice.”.
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Substitution of Arrangement of Sections of Act 56 of 1986 20
19. The following Arrangement of Sections is hereby substituted for the Arrangement of Sections in the principal Act:
“ARRANGEMENT OF SECTIONS
Sections
CHAPTER I
APPLICATION OF ACT
1. Definitions 2. Provisions of this Act may be applied in respect of other minerals
CHAPTER I1
PART 1
SOUTH AFRICAN DIAMOND AND PRECIOUS METALS REGULATOR
3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
Establishment of South African Diamond and Precious Metals Regulator Objects of Regulator Functions of Regulator Board of Regulator Persons disqualified from being members of Board Vacating of office by members of Board Terms of office of members of Board Meetings of Board Committees of Board Funds of Regulator Persons in service of Regulator
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16 No. 28513 GOVERNMENT GAZEITE, 14 FEBRUARY 2006
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Act No. 30,2005 DIAMONDS SECOND AMENDMENT ACT, 2005
PART 2
STATE DIAMOND TRADER
14. Establishment of State Diamond Trader 15. Objects of State Diamond Trader 16. Functions of State Diamond Trader 17. Board of State Diamond Trader 17A. Persons disqualified from being members of Board 17B. Vacating of office by members of Board 17C. Term of office of members of Board 17D. Meetings of Board 17E. Committees of Board 17F. Funds of State Diamond Trader 17G. Persons in service of State Diamond Trader
CHAPTER I11
ILLEGAL ACTS
21. 22. 23. 24. 25.
26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39.
44. 45. 46. 47. 48.
18. Possession of unpolished diamonds prohibited 19. Sale of unpolished diamonds prohibited 20. Purchase of unpolished diamonds prohibited 20A. Assistance by non-licensed persons prohibited
Dealing in unpolished diamonds restricted Processing of diamonds prohibited Erection and operation of machinery prohibited Export of unpolished diamonds prohibited Unpolished diamonds found or picked up by chance
CHAPTER IV
LICENCES AND PERMITS
Kind of licence, and permit and certificate Applications for licences Consideration of applications for licences Issue of licences Conditions of licence Business premises Period of validity and renewal of licence, permit and certificate Transfer of licences by juristic persons prohibited Applications by natural persons for transfer of licences Controlling interest in companies and close corporations Conversions of companies and close corporations Suspension and cancellation of licences Return of licences Appeal to Minister against decisions of Regulator in respect of licences
CHAPTER V
DIAMOND TRADE
Utilization of unregistered premises as diamond trading house prohibited Applications for registration of diamond exchanges Consideration of applications for registration of diamond exchanges Registration of diamond exchanges Dealings in unpolished diamonds restricted to approved premises
48A. Condition for export of unpolished diamonds 49. Approval of premises 50. 52.
Processing of diamonds restricted to approved premises Dealings in unpolished diamonds on behalf of juristic persons restricted to authorized representatives
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15
10
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$0
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io
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18 No.28513 GOVERNMENT GAZETTE, 14 FEBRUARY 2006
ArtNa30,200S DIAMONDS SECOND AMENDMENT ACT, 2005
53. 54. 55. 56. 56A. 57. 59. 59A.
59B.
Applications for registration of authorized representatives Registration of authorized representatives Receipt of unpolished diamonds by licensees Notes of receipt or purchase in respect of unpolished diamonds Disclosure that diamond is synthetic diamond Registers in respect of unpolished diamonds Functions of Regulator in respect of buying and selling of diamonds Functions of State Diamond Trader in respect of buying and selling o diamonds Diamond producers to offer unpolished diamonds to State Diamond Trader
CHAPTER VI
60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 69A. 70. 71. 72. 73. 74.
75. 76.
’ 77. 78. 79. 80. 81.
82. 83. 84. 85. 86. 87. 90. 91. 92.
EXPORT OF DIAMONDS
Export of unpolished diamonds Registration of unpolished diamonds for export Levying of export duty on unpolished diamonds Exemption from export duty Deferment of payment of export duty Examination and valuation of unpolished diamonds Market value Fine in case of difference in values Payment of export duty and fine Release of unpolished diamond for export Requirements after export of unpolished diamond Export of polished diamonds Registration of polished diamonds for export Examination and retention of polished diamonds Release of polished diamonds for export Exemption from provisions relating to offering or registration of polished 01 unpolished diamonds Regulator’s decision on unpolished or polished diamonds Assessment of value of unpolished and polished diamonds
CHAPTER VII
CONTROL MEASURES
Control over production of diamonds Furnishing Regulator with information Inquiries by Regulator Appointment of inspectors Functions of inspectors and police officials
CHAITERYLII
OFFENCES, PENALTIES AND OTHER JUDICIAL MATTERS
Offences relating to illegal acts offences relating to diamond trade offences relating to export of diamonds offences relating to functions of Regulator, inspectors and police officials Offences involving fraudulent conduct Penalties Liability of employer or principal , Porfeiture Jurisdiction of magistrates’ courts
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20 No. 28513 GOVERNMENT GAZETTE, 14 FEBRUARY 2006
Act No. 30,2005 DIAMONDS SECOND AMENDMENT ACT, 2005
CHAPTER IX
GENERAL
93. Levies 94. 95. Regulations 96. Consultation by Regulator 97. Assignment of functions 98. 99. Short title and commencement
Co-operation with other governments and bodies
Amendment or repeal of laws, and savings
SCHEDULE”. 10
Substitution of long title of Act 56 of 1986
20. The following long title is hereby substituted for the long title of the principal Act: “To provide for the establishment of the South African Diamond and Precious Metals Regulator and for the establishment of the State Diamond Trader; for control over the possession, the purchase and sale, 15 the processing, the local beneficiation and the export of diamonds; and for matters connected therewith.”.
Short title
21. This Act is called the Diamonds Second Amendment Act, 2005, and comes into 20 operation on a date fixed by the President by proclamation in the Gazette.