Can you give an overview of SADPO and the organization’s history in the South African mining industry?

Certainly. SADPO, which stands for the Small-Scale Artisanal Diamond Producers Organization, was established in 2001 with the aim of representing and streamlining the smaller side of the diamond-producing industry in South Africa. We operate as a non-profit organization governed by our constitution. Our membership comprises approximately 85% of all current small-scale diamond miners in South Africa, including a diverse range of artisanal and junior miners. While the majority of our members are alluvial miners, encompassing marine and smaller kimberlite mines, we strive to ensure the comprehensive representation of the small-scale diamond mining sector.

The value of small-scale diamond mining production contributes approximately 25% of the overall South African production value. This demonstrates that we produce diamonds of exceptional quality, significantly contributing to foreign exchange earnings and tax revenue throughout the country.

To what extent has the diamond market recovered from the pandemic?

The pandemic had a profound impact on the small diamond mining industry. Even before the Covid-19 outbreak, our sector faced financial challenges, and we had to adapt to a new normal that brought additional costs to comply with relevant health and safety protocols. However, we prioritize the well-being of everyone involved in and around our operations.

Initially, the diamond market experienced significant losses as the pandemic disrupted sources of income for diamond mining. The entire supply chain felt the impact. To retain our employees, we were compelled to continue production. Fortunately, the diamond market has displayed resilience and has not only recovered but has surpassed pre-Covid levels.

How would you describe the exploration climate for diamonds in South Africa, and what is causing the decline in alluvial diamond mining?

The viability of a diamond mining project can only be determined through bulk sampling. Currently, around 50% of our members operate under exploration licenses. The decline in alluvial diamond mining is primarily attributed to the regulatory framework in South Africa, which we believe is more tailored for large-scale mining rather than small-scale miners. The framework takes a one-size-fits-all approach, resulting in unnecessary operating expenses that further strain our financial viability. Additionally, this framework has hindered foreign investment opportunities for small mining companies. While SADPO acknowledges the intentions of the regulatory framework, we firmly believe that simpler, more user-friendly, and practically implementable regulations can achieve the same goals.

In May 2021, the Department of Mineral Resources and Energy (DMRE) released a draft artisanal and small-scale mining policy document for public comment. SADPO had the opportunity to participate in discussions prior to its publication. The draft policy acknowledges certain shortcomings in the legislative and regulatory framework specifically related to small and artisanal miners. This is a significant step in the right direction, and SADPO eagerly awaits the final policy, as it has the potential to formalize currently illegal mining activities.

We strongly believe that the diamond industry requires a commodity-specific policy that addresses our unique mining methods and specific needs.

The turnaround times for license applications should be significantly reduced, not exceeding 30 days for artisanal mining and 60 days for small-scale mining. The application fees for artisanal licenses should be capped at R2,500, and for small-scale licenses at R5,000, with only nominal rehabilitation bonds applicable in both cases. Water use licenses should only be required for small-scale mining licenses, as artisanal miners do not utilize water in their operations. Clear definitions and regulations regarding employment and equipment usage should be established for both artisanal mining and small-scale mining.

What would you suggest to turn around the dwindling numbers of small-scale diamond miners, specifically regarding financing?

SADPO proposes that artisanal and small-scale diamond miners be exempted from the current royalty act and only be responsible for a royalty of 2% on gross sales. We firmly believe that if our suggested policy changes are incorporated into the new legislation, the small-scale diamond industry can regain its former heyday from the late 1990s, consequently creating much-needed job opportunities in the rural areas of our country.