KIMBERLEY%20PROCESS

1

BRIEFING SESSION TO THE PORTFOLIO COMMITTEE ON
MINERALS AND ENERGY
1. HIGHLIGHTS OF THE 2003/2004 FINANCIAL YEAR
END,(WITH EMPHASIS ON THE AUDITOR GENERALS
REPORT) 2. KIMBERLEY PROCESS CERTIFICATION
SCHEME 3. FUTURE PLANS
2
DIAMOND PRODUCTION LARGE SCALE MINES
3
ESTIMATED DIAMOND PRODUCTION FROM SMALL SCALE
PRODUCERS
4
TOTAL ROUGH DIAMOND EXPORT
5
TOTAL ROUGH DIAMOND IMPORTS
6
TOTAL POLISHED DIAMOND IMPORTS
7
TOTAL POLISHED DIAMOND EXPORTS
8
EXPORT OF ROUGH DIAMONDS BY VARIOUS LICENSE
HOLDERS
9
US DOLLAR VALUE OF UNPOLISHED DIAMONDS EXPORTED
BY LICENSE HOLDERS
10
ESTIMATED TOTAL DIAMOND PRODUCTION FROM SA
11
FINANCIAL PERFORMANCE
12
LICENSES APPROVED
13
LICENCE APPLICATIONS

PERIOD UNDER REVIEW O1 APRIL 2004 TO
CURRENT APPROVED NOT TAKEN UP Dealers
license 128 62 Cutting license 25 12 Resea
rch license 4 1 TOTAL APPLICANTS
157 75 BLACK APPLICANTS 33 41
14
EMPLOYEE DEMOGRAPHICS
15
2003/2004 AGS REPORT

• 4.1 Internal Control Shortcomings
• Inadequate control on fixed assets
• All assets accounted for and loaded on the new
  Greater Plains system
• N(i) Forms selected did not have invoice numbers
  
• Response?
• 4.2 The South African Diamond Board did not have
  an Audit Committee for the period under review
• Audit committee has been established as per the
  PFMA requirements, and an Audit Committee charter
  has been adopted. Five members constitute the
  Audit committee

16
Continued.

• 4.3 Internal audit function, A rolling three year
  strategic internal audit plan, an internal audit
  plan for the first year and plans indicating the
  scope of each audit in the annual audit plan
• Internal audit functions defined,Internal risk
  assessments conducted and the three year
  strategic internal audit plan finalized

17
Continued.

• 4.4 Financial Lease on motor vehicle
• Terminated
• 4.8 Policy for the provision of bad debt
• Draft policy with Audit Committee

18
CONTINUED..

• 4.9 Validity of exemptions under Sect. 63 and 59
  of the Diamond Act
• Meeting held at the AGs office on 20 July 2004,
  agreed that DME and National Treasury would
  obtain a final legal opinion from the Chief State
  Law Advisor

19
KPCS- LEADERRSHIP SYNOPSIS

• LAUNCHED IN SWITZERLAND SEPT. 2002
• IMPLEMENTATION DATE JAN. 2003
• THE LEADERSHIP SINCE INCEPTION OF THE SCHEME
• Mr. A CHIKANE ( SADB CHAIRMAN) FOR THE YEAR
  2002 AND 2003
• 2004 CANADA
• 2005 RUSSIA
• 2006 BOTSWANA ?

20
KIMBERLEY PROCESS

• SADB PARTICIPATED ON THE FOLLOWING
• REVIEW VISITS SADB AS TEAM MEMBER
• DUBAI (UAE)
• DEMOCRATIC REPUBLIC OF CONGO
• REVIEWS (SA - LEADER)
• MISSION TO CONGO BRAZAVILLE
• VISIT SIERRA LEONE
• FACT FINDING MISSION TO LIBERIA
• VISIT GUINEA

21
COMMITTEES ESTABLISHED

• WORKING GROUP ON MONITORING AND CONTROL
• DIAMOND EXPERTS WORK GROUP
• STATISTIC WORKING GROUP
• PARTICIPATING WORKING GROUP

22
NUMBER OF KIMBERLEY CERTIFICATES ISSUED FOR THE
CALENDER YEAR 2003
23
KIMBERLEY PROCESS REVIEW VISIT(19/10/2004
21/10/2004)

• FINDINGS
• SOUTH AFRICA FULFILLS IN A SATISFACTORY MANNER
  ITS UNDERTAKING UNDER THE KPCS AND THEREFORE MEET
  THE REQUIREMENTS OF THE KPCS. THROUGH THE
  PROPOSED NEW LEGISLATION, INTERNAL CONTROLS WILL
  BE CONSIDERABLY ENHANCED.

24

• BEST PRACTICES
• - FOUR PARTS LAYOUT OF THE CERTIFICATE ENABLES A
  MORE COMPLETE AUDIT TRAIL OF THE EXPORT.
• -INTERGRATED DATABASE SYSTEM
• TENDERS AFFORDTHE SMALL SCALE MINERS TO REALISE
  FAIR MARKET VALUE ON THEIR GOODS.

25
RECOMMENDATIONS

• To take an inventory of all stocks held by all
  agencies in S A. i.e privately owned mines
  included.
• Ensure that all Small mining operations are
  registered.
• Apply tracking from mine to point of export for
  Rough diamonds production.
• Institute a sign-off procedure to provide a
  cross-check by more than one person on each KPC.

26
RECOMMENDATIONS CONTINUED

• Enhance informatics system to provide
  verification with an up-to-date KP participants
  List.
• Centralize the filing system in a coherent manner
  to permit an audit of the paper trail.
• Introduce an audit process to identify leakage in
  the rough diamond market.

27
Department of Minerals and Energy
SOUTH AFRICAN DIAMOND BOARD (As per Diamond Act,
Act 56 of 1986)
Chairman (non-executive)
Board of Directors representing
Producers
Industry Assoc.
DTC
Jewellery Council
Civil Society
DME
DTI
Dept. Finance
SAPS
Board committees
Section 59 Committee
Technical Committee
Licensing Committee
Finance Committee
Executive Committee
BEE Committee
Audit Committee
CEO
Finance
Licensing
Inspectorate
Data
Administration
28
FUTURE PLANS BASED ON THE CHANGES ANTICIPATED
AFTER THE AMENDMENT TO THE DIAMOND ACT, ACT 56 OF
1986

• Restructuring of the Board
• Collection of the 5 duty on rough diamonds
  exports
• Establishment of a section 21 company to focus on
  the Diamond Exchange and Diamond trade
• Section 59 agreements
• Deferments

29
HUMAN RESOURCES PLAN
WITH THE ESTABLISHMENT OF THE SECTION 21 COMPANY,
WHICH WILL BE TASKED WITH CREATING A DIAMOND
EXCHANGE /EXPORT CENTRE AND A TRADING CENTRE A
TOTAL OF 21 NEW JOBS WILL BE CREATED Care will
be taken to ensure that there is equitable
representation in all occupational categories and
levels as per the Employment Equity Act
30
HUMAN RESOURCES NEEDS AS A RESULT OF THE
RESTRUCTURING
Additional Diamond Inspectors Additional Export
Administrators Additional License
Officers Debtors Clerks
31
FUTURE PLANS ON BENEFICIATION

• FEASIBILITY STUDIES ON THE ESTABLISHMENT OF
  AFRICAN JEWEL CITIES
• Kimberley
• Cape Town -
• Polokwane
• Johannesburg International Airport