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Last Updated: Tuesday, 11 October 2005, 12:35 GMT 13:35 UK
Threat to De Beers diamond sales
Diamond ring
De Beers is the world's biggest diamond producer
Diamond giant De Beers is to go before South Africa's parliament on Wednesday to fight attempts to open up its tight grip on diamond distribution.

The firm's marketing arm, the Diamond Trading Corporation (DTC), ships South African gems to London to be mixed with stones from elsewhere for onward sale.

It is the world's largest source of raw diamonds, and dominates world markets.

The government wants restrictions on raw gem sales eased, to encourage the domestic jewellery business.

But De Beers says the move could mean the end of its trading arm - and could harm smaller diamond mines.

"The Diamond Bill will have the effect of compromising the DTC's future viability," said Anglo American, the giant mining group which owns 45% of De Beers.

De Beers produces about 60% of the world's diamonds.

Job questions

The bill in question is a draft law designed to create a state diamond trader and bring in a 15% export levy on diamond shipments.

Both De Beers and Anglo are to testify before the parliamentary committee considering the legislation.

The aim, the African National Concress government argues, is to help the indigenous gemstone industry evolve from being solely a supplier of raw stones to a seller of jewellery and finished, polished gems.

That, the ANC argues, will create more jobs and make sure the country takes a fairer share of the income from the diamond industry.

But De Beers insists the measure will actually cost jobs, by adding costs which could force it to shut down smaller mining operations.

"The bill could render marginal mines uneconomic and could harm small operations the most," it argued in a submission to parliament.

The Chamber of Mines, the industry's lobby group, said that more than 8,500 jobs could be lost thanks to the legislation - with only about 450 being created.

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