This report investigates the contribution of mining, and in particular diamond mining, to the economic development of South Africa, in terms of its contribution to the fiscal resources of government. By necessity it is based on incomplete information, as while extensive efforts have been made to explore and account for the views of industry and government stakeholders, and all assistance is gratefully acknowledged, some parties remain reluctant to contribute data. Indeed, one conclusion of the paper is that more transparency is required in order to more fully make an assessment of the development value of diamond mining. However, based on the information that is available on taxes paid, import and export volumes and values there exists significant discrepancies indicative of possible transfer pricing manipulation of rough diamond values. This is due to the monopoly position of the De Beers Company and their consequent ability to designate price in various locations in the value chain and when moving diamonds across borders. Because of these discrepancies it can be plausibly suggested that the industry is not contributing the level of tax that could be reasonable expected by the citizens of South Africa.
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