Mining in focus
established miners to flourish and requiring
them to assist the emerging miners,” says
Marengwa.
But he doesn’t believe the current 26% or
30% black equity ownership laws provide the
enabling framework. Emerging black miners
don’t have the funds to buy those stakes or the
ability to wait five years or longer for trickle
dividends to pay them off, assuming white-
owned companies will finance them.
Lyndon de Meillon, a geologist, is the
founder of Paleostone Minerals, a consulting
company to the diamond sector for the past
20 years. He moved into alluvial diamond
mining five years ago. De Meillon says that
permitting issues are one of the alluvial
miners’ greatest concerns.
“The regulatory requirements, costs and
red tape involved to obtain a prospecting or
mining licence makes it too difficult for a
start-up company to fulfil. It also takes well
over a year to get a permit, yet the average
life of an alluvial diamond concession is only
1.3 years,” says de Meillon. Fulfilling all the
requirements for a permit application requires
specialist consulting skills which can bring the
cost to more than R1.2-million.
Yet, de Meillon says, there are people with no
experience or background in mining who have
secured permits. Many of those permitted
areas lie untouched for years, but despite the
“use it or lose it” principle of the Mineral and
Petroleum Resources Development Act, no
action is taken against the permit holders.
Alternatively, they are contracted to existing
operators, thereby further negating critically
needed transformation and creation of black
mine owners and operators.
There are no proper
support mechanisms
for new entrants to the
industry.
Impractical regulations
The 26% black empowerment ownership
requirements are impractical for privately-
owned alluvial diamond companies, which
comprise 99% of the industry. The lack of bank
financing for alluvial diamond mining makes
it very difficult for black entrepreneurs to buy
into an existing company.
“One of the reasons that financiers shy
away from alluvial diamond mining is that
it is a very high-risk business,” de Meillon
says. “Grades are extremely low, at about 0.3
carats per hundred tonnes. Some areas yield
very little, others are more profitable and
occasionally a special stone is uncovered, but
it is impossible to predict their frequency.
Average diamond values can vary by 300%
from one month to another. Nevertheless,
these challenges have led to the creation of
a small diamond mining sector which has
developed the experience and skills capable
of successfully exploiting these unique
deposits, using the most sophisticated
diamond recovery technology the world has
to offer.
Alluvial diamond miners in the Northern Cape are struggling to survive in a hostile environment.
www.miningmirror.co.za
JULY 2019 MINING MIRROR [25]