SOUTH AFRICAN DIAMOND AND PRECIOUS METALS REGULATOR … REGULATOR ANNUAL REPORT … · 4 SOUTH AFRICAN DIAMOND AND PRECIOUS METALS REGULATOR Almost ¿ ve years have already passed

SOUTH AFRICAN DIAMOND ANDPRECIOUS METALS REGULATOR

ANNUAL REPORT 2011/2012 1

The Chairperson’s Statement 4

An Overview from the CEO 8

Corporate Governance 10

Board members 12

Mission Statement and Objectives 18

Performance Information

Compliance (Licensing) 20

Diamond Inspectorate 24

Precious Metals and Bene ciation 27

Diamond Exchange and Export Centre 32

Government Diamond Valuator 38

Kimberley Process Certi cation Scheme and Communication 46

Legal Services 53

Security Risk Management 54

Human Resources Management 55

Information Communication Technology 65

Finance 66

Internal Audit 67

Financial Contents

Accounting Authority’s Responsibility and Approval 70

Report of the Audit Committee 71

Report of the Auditor General 73

Annual Financial Statements 76

TABLE OF CONTENTS

The New Premises of the South African Diamond and Precious Metals Regulator

THE CHAIRPERSON’S STATEMENT

SOUTH AFRICAN DIAMOND AND PRECIOUS METALS REGULATOR4

Almost ve years have already passed since our Board took over at the helm of the South African Diamond and Precious Metals Regulator (Regulator). I am pleased to present the last annual report of our term to the shareholders and stakeholders, for the nancial year ended 31 March 2012.

It has been a hectic and eventful ve-year term for the Board. We started immediately after the promulgation of the Diamond Amendment Act, 2005 and the Precious Metals Act, 2005. The Regulator was almost a year old when these laws presented the industry with great challenges, resulting in the hosting of the Diamond and Precious Metals Indaba in Johannesburg in 2008. The indaba aimed to re ect on the status of the industry and to address contentious issues raised by the stakeholders. During the past ve years the Regulator also had its fair

share of challenges relating speci cally to the interpretation and constitutionality of the Diamond Act, as amended The Regulator was consequently hauled to courts of law regarding certain amendments to the Diamond Act, 1986 as amended. It is worth noting that our interpretations were in line with the judgments handed down in most cases and we are grati ed that the Regulator has maintained its integrity and respect in the diamond industry and precious metals industry at large. However, much needs to be done to ne-tune these laws in order to close the identi ed gaps.

Despite these challenges, the implementation of the new legislation was very successful. We experienced an increase in diamond and precious metals licences issued to the previously disadvantaged individuals entering into these industries. However, the Board was not happy with progress made on access to raw materials, training and jobs created and had to assign to Transformation Committee the speci c duty to look into these areas. The outcome of this strategy, we hope, will be realized soon.

Globally the diamond industry experienced periods during which prices of rough diamonds were increasing, underpinned by market speculation but later followed by a dramatic slow-down as the credit crunch and the uncertainty in the international banking system began to impact negatively on the diamond industry. In response to the economic crisis of 2008, major diamond miners cut their output due to a drop in demand. However, the recovery came faster than expected, straining the market and pushing prices up. As a result, excessive pressure was being applied to the rough diamond market because supply problems with polished stones have led cutters and polishers to buy.

The people of India and China have been responsible for this demand, as these two countries have seen market growth of about 25% while they contributed 20% of the global demand over the past year. Both polished and rough diamonds were moving well in these countries.



Last year we were disturbed to hear the sad news that the Oppenheimer family is exiting the diamond industry. They have been in this industry for a long time and it is unimaginable how it will move on without them. However, we were also comforted that their long-time partners, Anglo American’s, commitment to the company. We hope they will take De Beers to even greater heights. We wish the Oppenheimers well in their new endeavours; they have made our country proud in the global diamond industry.

On the precious metals front, it was a tale of two very different metals; one a store of wealth (gold) and the other a predominantly industrial metal (platinum). Gold set a new record high of over US$1 900 per ounce in August 2011. High prices were driven by currency concerns, in ation pressures, economic worries and the concomitant growth in investor demand. Interestingly, for most of the second half of 2011, the gold price was higher than the platinum price. The last time the gold price was consistently higher than the platinum price was a decade ago in the 1991/92 period. The platinum-gold ratio was at times as low as 0.9 in 2011, in contrasting with it often trading at more than twice the price of gold in the 1998 – 2008 period.

Platinum suffered when the nancial crisis struck in late 2008, while demand in 2011 was affected mainly by the Eurozone crisis. The many disruptions in supply were mainly due to safety-related stoppages and labour problems in South Africa. One would have expected the platinum price to spike, if it were not for the market surplus. This is a situation that is expected to continue in 2012. Gold, on the other hand, bene tted from the worries and anxieties of the economic problems and currency concerns in Europe, and often rallied on talks of further quantitative easing. It may be a while yet before it loses its current status as the “more precious” metal. These dynamics have affected the downstream industry in South Africa as well. Most notable were trends such as increasing scrap recycling, higher investment product fabrication (coins and minted bars) and lower jewelry fabrication.

New Board members Mr. P Arendse and Ms. N Mokoena joined as representatives of the South African Police Services.

I thank the Minister, Susan Shabangu, as well as the Deputy Minister, Godfrey Oliphant for providing us an opportunity to serve at their pleasure on the Board. It has been a wonderful and rewarding experience for us. I also wish to express my gratitude to the Board, management and staff members for their cheerful and untiring efforts in servicing the industry and our stakeholders.

S. Phiri

Chairman


S. Phihhhh ri

C

AN OVERVIEW FROM THE CEO


In the year under review, the SADPMR has been very aggressive in ensuring compliance with diamond and precious metals legislation. Compliance inspections targets, particularly with the diamond licensees, have been exceeded. This was due to the the Regulator having to assess the compliance status of existing licensees. A series of workshops were held throughout the country to inform and educate the industry about the role that the diamond and precious metal industry can play in job creation.

Pursuant to its objectives to promote bene ciation, the SADPMR moved to new premises at the end of last year. These premises are spacious, modern and have adequate security for business. In the new premises, space allocated to the Diamond Exchange and Export Centre (DEEC) has been doubled to accommodate more clients and to render ef cient services to the industry.

During this year the Government Diamond Valuator has been very ef cient and effective in assisting the State Diamond Trader to purchase 10% of goods offered by diamond producers. No disputes were experienced during the veri cation stages and this has improved access and availably of diamonds to bene ciators.

On the international front, the Kimberley Process (KP) nominated South Africa to serve as deputy chair for 2012. This means that South Africa will chair the KP in 2013. In 2013 the KP Certi cation Scheme (KPCS) will observe its tenth anniversary, making South Africa the rst country to chair the KP for the second time.

In its forthcoming plan the Regulator will focus in forstering and promoting additional supply of rough diamonds from various sources. We shall further facilitate the supply of raw materials, skills and entrepreneurial development, as well as access to markets for small players. This intervention will promote growth in bene ciation, create new jobs and sustain existing jobs in the diamond and precious metals industries.

GL Rapoo

Chief Executive Of cer

AN OVERVIEW FROM THE CEO

CORPORATE GOVERNANCE


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CORPORATE STRUCTURE OF THE SADPMR

BOARD MEMBERS


BOARD OF DIRECTORS

1

4 75

8

6

9 10

2 3

11


COMPOSITION

1 Messrs S PhiriChairperson 2 RA Manoko

Deputy Chairperson 3 GL RapooCEO 4 P Bersiks

Member

5 R Baxter* Member 6 L Delport

Member 7 L GroblerMember 8 A Luhlabo

Member

9 E Blom Member 10 K Rana

Member 11 Dr F PetersonMember 12 T Nell

Member

13 R PaolaMember 14 Ms N Zikalala

Member 15 Ms N Mokoena**Member

* * Appointed w.e.f 06 May 2011

* Resigned w.e.f. 01 October 2011

Mr E Majadibodu and Mr P Arendse were absent

12 13 14 15


BOARD MEETING

Name 01/04/11 04/05/11 27/05/11 10/06/11 27/07/11 27/09/11 25/10/11 31/01/12 24/02/12# 20/03/12

S Phiri Yes Yes Yes Yes Yes Yes No Yes No Yes

RA Manoko Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

GL Rapoo Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

P Bersiks Yes Yes Yes Yes Yes No Yes Yes Yes Yes

L Delport Yes Yes Yes Yes Yes No Yes Yes Yes No

E Majadibodu Yes Yes No No Yes Yes Yes Yes No No

L Grobler Yes Yes Yes No Yes Yes Yes Yes No Yes

A Luhlabo Yes Yes Yes Yes Yes No Yes Yes Yes Yes

E Blom No Yes Yes Yes Yes No Yes Yes No Yes

K Rana Yes Yes Yes Yes Yes Yes Yes Yes No Yes

T Nell Yes Yes No No Yes No No Yes Yes Yes

R Paola Yes Yes Yes Yes Yes Yes Yes Yes No Yes

N Zikalala Yes Yes Yes No Yes No Yes Yes No No

F Peterson No No Yes No Yes No No Yes No Yes

P Arendse** No No No No No Yes Yes No Yes No

N Mokoena** No No No No No Yes Yes No No Yes

R Baxter* Yes No No Yes Yes No No No No No

* * Appointed with effect from 06 May 2011

* Resigned with effect from 01/10/2011

# Director Development: Workshop on Public Finance Management Act

## On the 28 and 29th February 2012, the following members of the Board ( Merss RA Manoko, P Bersiks and Delport) briefed the Parliamentary Portfolio Committee on the Annual Report of 2010/2011 nancial year.

MEETINGS AND ATTENDANCE


MEETING ATTENDANCE

The Executive Committee: chaired by Mr. S PhiriMembers: Messrs. RA Manoko, GL Rapoo, R Baxter, P Bersiks and L Delport

Names 27/05/2011 25/10/11 31/01/12

S Phiri Yes No Yes

RA Manoko Yes Yes Yes

GL Rapoo Yes Yes Yes

R Baxter Yes No No

P Bersiks Yes Yes No

L Delport Yes No Yes

N Zikalala Yes No Yes

E Blom* No No Yes

*Appointed Chairperson of the Technical committee with effect from 01 October 2011

Audit and Risk Committee: chaired by Mr. P BersiksMembers: Messrs. E Blom, K Rana, GL Rapoo, M Ntumba*

Names 20/05/11 29/07/11 20/10/11 15/03/12

P Bersiks Yes Yes Yes Yes

E Blom No Yes No Yes

K Rana Yes No Yes Yes

GL Rapoo No Yes Yes Yes

M Ntumba* Yes No Yes Yes

R Paola Yes No Yes Yes

*Independent Auditor

BOARD COMMITTEES


Finance Committee: chaired by Mr. L DelportMembers: A Luhlabo, P Bersiks, E Majadibodu, R Paola, GL Rapoo

Names 19/04/11 20/05/11 21/07/11 19/10/11 26/10/11 18/01/12L Delport Yes Yes Yes Yes Yes YesA Luhlabo Yes Yes Yes Yes No YesP Bersiks Yes Yes Yes Yes Yes YesE Majadibodu No No No Yes No YesR Paola No Yes Yes No No YesGL Rapoo Yes Yes Yes Yes Yes Yes

Licensing Committee: chaired by Mr. RA ManokoMembers: Ms N Zikalala, A Luhlabo, K Rana, L Delport and GL Rapoo

Name 08/04/11 20/07/11 26/07/11 13/10/11 13/01/12 14/03/12RA Manoko Yes Yes Yes Yes Yes YesN Zikalala Yes Yes No No Yes No A Luhlabo Yes Yes Yes Yes Yes No K Rana No Yes Yes Yes No YesL Delport No Yes No No No No GL Rapoo Yes Yes No Yes Yes No

Technical Committee: chaired by Mr. R BaxterMembers: Dr F Peterson, Messrs E Blom, L Grobler and GL Rapoo

Names 07/04/11 15/07/11 12/10/11 17/01/12R Baxter Yes Yes No NoF Peterson No Yes No YesE Blom Yes Yes Yes YesL Grobler Yes Yes Yes YesL Rapoo Yes Yes Yes Yes

Ethics Committee chaired By: Mr. S PhiriMembers: R Manoko, K Rana and GL Rapoo

Names 21/07/11 18/01/12S Phiri Yes YesRA Manoko Yes YesK Rana Yes YesL Rapoo Yes Yes

BOARD COMMITTEES

MISSION STATEMENT & OBJECTIVES


VISION

Regulating for business excellence

MISSION

We render regulatory services by ensuring:

• compliance with legislation• skills transfer• business development support• equitable access to resources • local bene ciation

VALUES

• Integrity • Respect • Time management • Accuracy• Consistency

MANDATE

The South African Diamond and Precious Metals Regulator (SADPMR) was established by the Diamonds Act, 1986 as amended to administer the following legislation:

• Diamonds Act, 1986 (as amended) • Precious Metals Act, 2005 • Diamond Export Levy Act, 2007 in collaboration with South African Revenue Services (SARS)

KEY STRATEGIC OBJECTIVES

• To ensure competitiveness, sustainable development and job creation in the diamond and precious metals industry

• To ensure effective transformation of the diamond and precious metals sectors• To ensure equitable access to resources for local bene ciation• To ensure compliance with the legislative requirements• To improve organisational capacity for maximum execution brilliance

MISSION STATEMENT & OBJECTIVES

PERFORMANCE INFORMATION


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Chart 1. Diamond Licensing 2011/2012

During the period under review, a total of 348 diamond applications were nalised and licences issued. The majority of applications received and issued were for diamond dealers’ licences, followed by Authorised Rep certi cates.

PRECIOUS METALS LICENSING

Since the implementation of the Precious Metals Act on 1 July 2007, a total number of 1 603 applications were received and processed, with 1 177 licences issued to date.

Precious Metals (PM) licensing statistics for the period under review

Licence Type Applications Received Licences Issued

Re ning Licence 6 24

Jewelers Permit 89 131

Precious Metals Bene ciation 10 10

Export Approval 9 3

PM Import Permit 10 8

PM Certi cate 4 1

PM Special Permit 5 8

TOTAL 133 185



Chart 2. Precious Metals 2011/2012

Licences issued are rolled over from the previous reporting period

The above precious metals application chart indicates that the Regulator continues to receive applications for jewelery permits at a steady pace, mainly from new entrants. Applications rolled over from the previous reporting period were nalised and a total of 131 jewellers permits were issued in this reporting period.

HIGHLIGHTS

The twenty-four (24) Diamond and Precious Metals Bene ciation licences issued during this period created 146 jobs.

The conducting of workshops is leading to increased awareness and interest by HDSA’s to enter these industry sectors. All ve ( 5) regional workshops were well attended.

Three (3) additional workshops were conducted to address J-register billing and issues relating to licence renewals which will commence during 2012

A further workshop, focusing on students graduating from training institutions in the Jewel City precinct, was conducted to provide them – as prospective new entrants – with information on licence application requirements.



INSPECTIONS

Section 80(1) of the Diamonds Act 56 of 1986 as emended provides for the appointment of Diamond Inspectors. Various inspections are conducted by Diamond Inspectors for the following reasons:

1. when a new application is lodged and after the permit/licence is issued;

2. to approve the suitability of the business premises for the type of permit/licence applied for and to verify the address where the activities will take place;

3. to check if the activities are still in accordance to the terms and conditions of the permit/licence.

The following checks are done during inspection:

• verify the name of the company and the address;• check if the premises are shared with another licensee/permit holder;• check if the premises have a safe storage;• check if premises are controlled and monitored for entry and exit; • check if machines and equipment for the type of licence applied for are suitable;• con rm if transaction registers are kept and submitted to the Regulator for speci ed periods;• check if there are diamonds on the premises. A new applicant must not be in possession of

diamonds before a permit/licence is issued.

DIAMOND REGISTERS

In terms of Section 57 of the Diamond Act 1986 as emended every producer, manufacturer of synthetic diamonds, dealer, cutter or toolmaker shall keep or cause to be kept the prescribed register, in which shall be entered the prescribed particulars in respect of unpolished diamonds.

Regulation 13(iii) of the regulations promulgated in terms of the Diamonds Act further requires that licensees, including those which are inactive, keep Form J registers and forward to the Regulator a true copy of such register within seven days after the end of every month.

DIAMOND INSPECTORATE


These registers detail their production, buying and selling of diamond stocks.

i. Form J(i) : Diamond Producers

ii. Form J(ii) : Diamond Dealers Licence

iii. Form J(iii) : Diamond Bene ciation Licence

iv. Form J(iv) : Diamond Trading House

v. Form J(v) : Diamond Research

The submissions of J-Registers as per the relevant legislative requirements are imperative for statistical purposes, to enable the Regulator to collate data on the country’s production, trade and bene ciation levels. Most importantly, the information on the J-Registers provide for the audit-trail of unpolished diamonds, a requirement of the Kimberley Process Certi cation Scheme.

Penalties for non-submission of registers

Any person who fails to comply with or produce the register or proper books of accounts required to be kept by him or her in terms of the Diamonds Act is guilty of an offence and liable on conviction to a ne. The registers are available for purchase at the SADPMR of ces.

A BREAKDOWN OF THE INSPECTIONS DONE BY LICENCE TYPE

Licence Type Number of Inspections

Dealing (New) 199

Bene ciation (New) 26

Trading Houses (New) 2

Research (New) 2

Dealing (Follow-up) 219

Bene ciation (Follow-up) 137

Trading Houses (Follow up) 59

Research (Follow-up) 7

Total 651

The table above shows that most of the inspections were conducted on the follow-up of existing licences. These inspections included hand delivering statements of account for J-Register penalties. Positive results were realised in terms of revenue collection. During the period December 2011 to March 2012, the Regulator managed to collect R88 500 in register penalties alone.



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rs

Numb

er of

insp

ectio

ns

cond

ucted

100%

new

appli

cants

100 e

xistin

g lice

nce

holde

rs

Achie

ved.

100%

= 23

0 ins

pecti

ons

on ne

w ap

plica

tions

cond

ucted

Achie

ved.

356 f

ollow

up in

spec

tions

co

nduc

ted

Regis

ter al

l diam

ond

prod

ucer

sNu

mber

of pr

oduc

ers

regis

tered

100%

(122

mini

ng rig

hts

issue

d)

Achie

ved.

125 r

egist

ratio

ns

Monit

or th

e sub

miss

ion

of J-R

egist

ers

Timeo

us su

bmiss

ion of

re

gister

s10

0%Ac

hieve

d. 10

0% J

-regis

ter

subm

ission

mon

itore

d -14

160

Cond

uct w

orks

hops

to

infor

m an

d edu

cate

the

indus

try

Numb

er of

wor

ksho

p co

nduc

ted5

Achie

ved.

8 wor

ksho

ps co

nduc

ted

Cond

uct in

spec

tion o

n im

port

and e

xpor

ts of

diamo

nds (

airpo

rts)

Numb

er of

insp

ectio

ns

cond

ucted

100 %

of al

l impo

rts

and e

xpor

ts of

diamo

nds

Achie

ved.

100%

of in

spec

tion

requ

ests

were

cond

ucted

=7



The Precious Metals & Bene ciation Division is composed of two sub-divisions:

1. Precious Metals Inspectorate: This sub-division ensures compliance with the Precious Metals Act, and has two main functions: (i) conducting inspections relating to precious metals licences and applications for such licences, and (ii) monitoring trade transactions through prescribed registers and information submission forms;

2. Bene ciation: The main function of this sub-division is to implement government policies and legislation relating to bene ciation of precious metals and diamonds.

PRECIOUS METALS INSPECTIONS

A total of 473 inspections were conducted during the period April 2011 to March 2012. These comprise of 159 new business premises inspections and 314 follow-up inspections. A new premises inspection is conducted to approve the suitability of the business premises for the type of permit/licence applied for and to verify the address where the activities will take place, whereas a follow-up inspection is conducted to check if the activities are still in accordance with the terms and conditions of the permit/licence issued to the holder.

The aim of inspecting premises is to monitor compliance by the permit/licence holders, as stated in the Precious Metals Act and Regulations.

FIGURE 1.1: The number of inspections conducted on precious metals licence/permit holders and applicants

Month

PRECIOUS METALS AND BENEFICATION


TABLE 1.1: A breakdown of the inspections done by licence/permit type

Licence/Permit Type Number of Inspections for 2011/12 Number of Inspections for 2010/11

Re ning 16 27

Bene ciation 6 49

Jewelers 132 357

Special Permit 5 9

Certi cate 0 0

Bene ciation (Follow-up) 32 24

Jewelers (Follow-up) 271 252

Re ning (Follow-up) 11 7

Total 473 725

Table 1.1 represents a breakdown of the inspections conducted by licence/permit type and shows that most of the inspections were conducted on the follow-up premises inspections (especially Jeweler’s permit holders), as they comprise the majority of permit holders. Less new inspections were conducted most of which these were of Jewelers changing premises and a few new applicants.

Fewer inspections were conducted in this nancial year compared to the previous year, due to the decline in new applications.

REGISTER OF TRANSACTIONS

Every holder of a licence who deposits for safe-keeping, receives, dispatches or otherwise disposes of unwrought or semi-fabricated precious metal must keep a true and correct register in the prescribed format and for the prescribed period of all such precious metal deposited, received, dispatched or otherwise disposed of by him or her. A prescribed format of register needs to be submitted on a speci ed period (quarterly, bi-annually or annually) to the Regulator.

Register submissions remain a challenge because of the different submission periods for licence holders. Non-submission of registers is currently being followed-up and warning letters were sent to the defaulters.



PER

FOR

MA

NC

E IN

FOR

MAT

ION

: PR

ECIO

US

MET

ALS

INSP

ECTO

RAT

E

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Ensu

re co

mplia

nce w

ith

legisl

ative

requ

ireme

ntsCo

nduc

t insp

ectio

ns

on ne

w an

d exis

ting

busin

ess p

remi

ses

Numb

er of

insp

ectio

n co

nduc

ted10

0% ne

w ap

plica

nts

300 e

xistin

g

Not A

chiev

ed, 1

59 (9

2%)in

spec

tions

co

nduc

ted

Achie

ved,

314 i

nspe

ction

s co

nduc

ted

Some

appli

cants

wer

e not

avail

able

for in

spec

tions

. Ava

ilabil

ity of

ap

plica

nts w

ill be

con

rmed

befor

e ins

pecti

ons a

re co

nduc

ted

Cond

uct in

spec

tion o

n im

ports

and e

xpor

ts of

prec

ious m

etals

(airp

orts)

Numb

er of

insp

ectio

ns

cond

ucted

100 %

of al

l impo

rt an

d ex

ports

of pr

eciou

s me

tals

Not A

chiev

edAc

cess

to th

e airp

ort fa

cilitie

s was

pr

ohibi

ted be

caus

e of h

igh se

curity

an

d high

insu

ranc

e pre

mium

s. Ins

pecti

ons w

ill be

cond

ucted

on th

e pr

emise

s of th

e clie

ntsMo

nitor

the s

ubmi

ssion

of

PM R

egist

ers

Numb

er of

subm

ission

pe

r ann

um10

0%No

t Ach

ieved

, 638

/1 82

1 (35

%)

subm

ission

of P

M re

gister

sTh

e diffe

rent

nanc

ial ye

ars f

or th

e jew

elers

was a

cons

traint

. Lice

ncee

s wi

ll be c

ompe

lled t

o sub

mit b

efore

the

end o

f the

nanc

ial ye

ar

Regis

ter al

l pre

cious

me

tals p

rodu

cers

Numb

er of

prod

ucer

s re

gister

ed10

0%No

t Ach

ieved

, 61/8

8 = 69

%

prod

ucer

s reg

ister

edCo

mplex

owne

rship

struc

ture o

f co

mpan

ies an

d mine

s tha

t are

do

rman

t or u

nder

liquid

ation

could

no

t be r

egist

ered

. Com

panie

s tha

t ha

ve no

t reg

ister

ed w

ith S

ADPM

R wi

ll be f

ollow

ed up

in 20

12

Facil

itate

subm

ission

of

prec

ious m

etals

samp

les to

the S

APS

Fore

nsic

Lab

Numb

er of

prod

ucer

s su

bmitte

d to t

he

Fore

nsic

Lab

40%

(num

ber o

f pr

oduc

ers)

Ach

ieved

, 32/6

1 = 52

% p

rodu

cers

subm

itted s

ample

s to t

he F

oren

sic

Lab

Cond

uct w

orks

hops

to

infor

m an

d ed

ucate

the

indu

stry

Numb

er of

wor

ksho

ps

cond

ucted

5Ac

hieve

d, 5

works

hops

cond

ucted



BENEFICIATION

During the period under review, diamond bene ciators purchased a conservatively-estimated 230 000 carats of rough diamonds (3.2% of South Africa’s mine production) of which an estimated 200 000 carats (90%) were subjected to cutting and polishing.

SADPMR estimates South Africa’s total gold fabrication (bene ciation) in 2011 at some 20 tons, moderately down from the 22 tons fabricated in 2010.

Platinum-group metal (PGM) fabrication (bene ciation) is dominated by the fabrication of catalytic converters. SADPMR estimates PGM fabrication at some 32 tons in 2011.



PER

FOR

MA

NC

E IN

FOR

MAT

ION

: BEN

EFIC

IATI

ON

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Co

nstra

ints

and

prop

osed

re

med

ies

Ensu

re

comp

etitiv

enes

s, su

staina

ble

deve

lopme

nt an

d job

cre

ation

in th

e diam

ond

and p

recio

us m

etals

indus

tries

Facil

itate

busin

ess

deve

lopme

nt in

diamo

nd an

d pre

cious

me

tals b

ene

ciatio

n

Numb

er of

Ente

rpris

es

create

d5

Not A

chiev

ed.

No E

nterp

rises

crea

ted

The m

ajor c

onstr

aint is

acce

ss

to fun

ding,

and i

n the

case

of

diamo

nds,

the in

abilit

y to s

ecur

e a

roug

h diam

ond s

upply

. Reg

ulator

to

facilit

ate so

urce

s of fu

nding

and

supp

ly of

diamo

nds f

rom

prod

ucer

s

Impr

ove o

rgan

isatio

nal

capa

city f

or m

axim

um

exec

ution

brilli

ance

Comp

ile a

prec

ious

metal

supp

lier

datab

ase f

or

bene

ciato

rs

Comp

ile pr

eciou

s me

tals t

rade

hand

book

Prec

ious M

etal s

uppli

er

datab

ase

Trad

e Han

dboo

k

1 1

Achie

ved

1 Pre

cious

Meta

l sup

plier

datab

ase

create

d

Achie

ved

1 Pre

cious

Meta

l trad

e han

dboo

k co

mplet

ed

Prov

ide te

chnic

al ins

ight, a

dvice

and

rese

arch

on di

amon

ds

and p

recio

us m

etals

Repo

rts on

tech

nical

issue

s ide

nti ed

Quar

terly

repo

rts

Achie

ved

1. F

our q

uarte

rly re

ports

to th

e Te

chnic

al Co

mmitte

e com

pleted

in

the pe

riod.

2. A

dvise

d on m

inted

bar, i

mpor

t pe

rmit a

nd ex

port

appr

oval

appli

catio

ns3.

Thr

ee pr

esen

tation

s give

n at

confe

renc

es an

d wor

ksho

ps.

Supp

ort M

INTE

K Di

amon

d Pro

vena

nce

Lab w

ith te

chnic

al ex

pertis

e.

Quar

terly

repo

rtQu

arter

ly re

ports

Achie

ved,

Four

quar

terly

repo

rts

comp

leted

in th

e yea

r and

tech

nical

expe

rtise p

rovid

ed to

MIN

TEK

as

and w

hen r

eque

sted.



The

Dia

mon

d E

xcha

nge

and

Exp

ort C

entre

(DE

EC

) was

est

ablis

hed

in te

rms

of s

ectio

n 59

(b) o

f the

Dia

mon

d A

ct a

nd h

as b

een

in o

pera

tion

sinc

e 14

Jan

uary

200

8. It

s co

re fu

nctio

ns a

re to

faci

litat

e th

e bu

ying

, sel

ling,

exp

ortin

g an

d im

porti

ng o

f dia

mon

ds.

The

DE

EC

is a

sec

ure

and

cont

rolle

d en

viro

nmen

t whe

re d

iam

onds

are

offe

red

on te

nder

to th

e di

amon

d lic

ence

-hol

ders

. It p

lays

a v

ital r

ole

in e

nsur

ing

that

unp

olis

hed

diam

ond

tend

ers

are

faci

litat

ed fa

irly

to th

e lo

cal m

arke

t.

PER

FOR

MA

NC

E IN

FOR

MAT

ION

: DIA

MO

ND

EXC

HA

NG

E A

ND

EXP

OR

T C

ENTR

E (D

EEC

)

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Ensu

re eq

uitab

le ac

cess

to re

sour

ces

for lo

cal b

ene

ciatio

n

Emba

rk on

a ma

rketin

g stra

tegy t

o inc

reas

e clie

nt ba

se

Numb

er of

clien

ts1 0

00No

t Ach

ieved

Th

e obje

ctive

was

linke

d to t

he

facilit

ation

of te

nder

s for

polis

hed

diamo

nds.

To be

addr

esse

d in t

he ne

w na

ncial

year

Facil

itate

the

marke

ting o

f poli

shed

dia

mond

s

Numb

er of

polis

hed

trade

tran

sacti

ons

20No

t Ach

ieved

La

ck of

a we

b-ba

sed s

ystem

, to be

ad

dres

sed i

n the

new

nanc

ial ye

ar.

Trad

ing o

or to

be es

tablis

hed i

n the

ne

w na

ncial

year

to ad

dres

s this

ob

jectiv

e

Facil

itate

the bu

ying

and s

elling

of

diamo

nds

Numb

er of

parce

ls re

ceive

d for

tend

er80

0Ac

hieve

d 4

631

Incre

ase i

n num

ber o

f view

ing

room

s

Incre

ased

prod

uctio

n fro

m on

e pr

oduc

er

Incre

ase i

n num

ber o

f par

ticipa

nts.

The e

xpan

sion o

f the n

ew D

EEC

mana

ged t

o cate

r for

mor

e clie

nts an

d the

incre

ased

prod

uctio

n fro

m on

e pr

oduc

er al

so co

ntribu

ted to

the o

ver

achie

veme

nt of

targe

t.

DIAMOND EXCHANGE AND EXPORT CENTRE (DEEC)


Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Ensu

re co

mplia

nce

with

legisl

ative

re

quire

ments

Regis

tratio

n of

expo

rt an

d imp

ort o

f dia

mond

s

Numb

er of

regis

tered

ex

ports

and i

mpor

ts1 2

00Ac

hieve

d 4 0

74

Incre

ase i

n num

ber o

f reg

ister

ed

shipm

ents.

Incre

ased

prod

uctio

n fro

m on

e pr

oduc

er

The e

xpan

sion o

f the n

ew D

EEC

man-

aged

to ca

ter fo

r mor

e clie

nts an

d the

inc

reas

ed pr

oduc

tion f

rom

one p

rodu

cer

also c

ontrib

uted t

o the

over

achie

ve-

ment

of tar

get.

Numb

er of

Kim

berle

y pr

oces

s cer

ti ca

tes

issue

d

800

Achie

ved

1 152

Incre

ase i

n num

ber o

f reg

ister

ed

shipm

ents.

Incre

ased

prod

uctio

n fro

m on

e pr

oduc

er

The e

xpan

sion o

f the n

ew D

EEC

man-

aged

to ca

ter fo

r mor

e clie

nts an

d the

inc

reas

ed pr

oduc

tion f

rom

one p

rodu

cer

also c

ontrib

uted t

o the

over

achie

ve-

ment

of tar

get.

Dia

mon

d te

nder

s fa

cilit

ated

at t

he D

EEC

dur

ing

the

perio

d A

pril

2011

to M

arch

201

2

The

DE

EC

man

aged

to fa

cilit

ate

the

tend

ers

belo

w a

nd th

e fo

llow

ing

wer

e ac

hiev

ed:

• Th

e nu

mbe

rs o

f vie

win

g ro

oms

wer

e in

crea

sed

from

10

to 3

0, w

hich

pos

itive

ly im

pact

ed th

e nu

mbe

r of v

iew

ers

parti

cipa

ting

at th

e D

EE

C.

• A

n in

crea

se o

f 19.

82%

occ

urre

d in

term

s of

wei

ght o

f dia

mon

ds (i

n ca

rats

) sub

mitt

ed b

y th

e in

dust

ry. T

he n

umbe

r of d

iam

ond

parc

els

that

qua

li e

d to

be

expo

rted

in th

e 20

11/2

012

incr

ease

d by

50.

52%

in c

ompa

rison

to th

e pr

evio

us y

ear.

This

was

due

to a

n in

crea

se

in th

e n

umbe

r of p

arce

ls p

lace

d on

tend

er a

nd th

e nu

mbe

r of v

iew

ers.



Diamond offered for local sale by Diamond Dealers and Bene ciators

QuartersQ1 Q2 Q3 Q4

Apr – Jun 2011 Jul – Sept 2011 Oct – Dec 2011 Jan – Mar 2012 Totals

Total carats received

Total US$ received

372 100.17

150 140 644.64

377 955.70

127 529 558.97

787 131.78

129 983 114.85

516 046.29

119 204 596.90

2 053 233.94

526 857 915.36

Total carats of sold parcels

Total US$ value of sold parcels

697.94

95 342.00

1 294.90

2 495 459.00

1 865.21

43 590.68

1 432.86

42 412.00

5290.91

2 676 803.68

Total carats exported by highest bidders

Total US$ value exported by highest bidders

362 064.26

144 743 706.69

373 358.09

120 414 300.30

743 541.11

128 896 524.17

492 294.33

118 275 747.60

1 971 257.79

512 330 278.76

Total carats withdrawn

Total US$ withdrawn

9 275.63

2 843 962.60

0.00

0.00

326.46

1 043 000.00

22 319.10

410 349.35

31 921.19

4 297 311.95

Diamond Dealers and Bene ciators submitted a total of 2,053,233.94 carats valued at US$ 526,857,951.36 to be placed for export at the DEEC for a minimum of four workings days. A total of 5,290.91 carats (0.25%) valued at US$2,676,803.68 was sold locally and the balance was exported as there were no offers for these parcels.

Diamonds offered for local sale by Diamond Producers

QuartersQ1 Q2 Q3 Q4

Apr – Jun 2011 Jul – Sept 2011 Oct – Dec 2011 Jan – Mar 2012 Totals

Total carats received

Total US$ received.

296 444.31

80 873 475.50

169 331.75

24 661 132.87

498 849.33

90 712 502.11

603 840.99

120 884 293.62

1 568 466.38

317 131 404.10

Total carats of sold parcels.

Total US$ value of sold parcels

284 060.58

74 945 806.17

10 539.09

22 984 719.44

411 052.32

66 018 748.26

574 771.31

94 678 465.45

1 280 423.30

258 627 739.32

Total carats exported by highest bidders

Total US$ value exported by highest bidders

279 223.88

72 384 303.45

160 527.90

20 003 398.55

486 730.66

84 409 010.76

594 407.04

119 975 383.43

1 520 889.48

296 772 096.19

Diamond Producers offered a total of 1,568,466.38 carats valued at US$317,131,404.10 for local sale at the DEEC. A total of 1,520,889.48 carats (96.96%) valued at US$296,772,096.19 carats was sold on tender.



Polished Diamond Exports

POLISHED EXPORTS (APRIL 2011 TO MARCH 2012)

MONTH CARATS DOLLAR VALUE (US$) RAND VALUE (ZAR)

Apr-11 16 130.60 $65 430 914.40 R 479 297 789.27

May-11 16 903.07 $108 310 561.05 R 741 700 445.81

Jun-11 13 739.24 $81 040 060.10 R 536 878 421.00

Jul-11 16 201.90 $103 828 997.97 R 705 452 491.00

Aug-11 16 292.50 $97 420 320.45 R 701 840 399.82

Sep-11 13 838.49 $76 878 513.10 R 603 674 457.61

Oct-11 13 429.64 $86 788 023.66 R 694 247 206.79

Nov-11 15 204.07 $90 222 289.97 R 714 967 706.89

Dec-11 8 663.53 $53 606 648.29 R 415 492 326.00

Jan-12 10 380.64 $549 510 290.09 R 326 703 680.00

Feb-12 13 851.06 $73 685 988.60 R 656 109 684.01

Mar-12 12 847.44 $1 349 458 143.00 R 1 044 549 953.00

TOTAL 167 482.18 $2 736 180 750.68 R 7 620 914 561.20



South Africa exported a total of 167,482.18 carats valued at US$2,736,180,750.68 during the period April 2011 to March 2012. The polished exports registered during this nancial year have increased by 3.72 % compared to the previous nancial year.

Polished Diamond Imports

POLISHED IMPORTS (APRIL 2011 TO MARCH 2012)

MONTH CARATS DOLLAR VALUE (US$) RAND VALUE (ZAR)

Apr-11 9 912.02 $39 696 231.24 R 177 175 586.96

May-11 14 568.33 $40 155 934.65 R 281 731 146.05

Jun-11 20 884.61 $42 454 045.44 R 246 410 484.50

Jul-11 13 079.56 $37 966 549.26 R 264 913 000.15

Aug-11 12 460.72 $31 716 272.72 R 221 334 061.79

Sep-11 15 014.98 $49 827 038.87 R 341 218 848.38

Oct-11 7 015.08 $22 187 794.57 R 167 396 114.19

Nov-11 13 291.58 $34 742 509.96 R 264 803 973.00

Dec-11 5 615.27 $15 124 630.54 R 112 152 192.60

Jan-12 12 803.51 $27 610 316.35 R 193 272 214.45

Feb-12 8 239.97 $14 824 684.00 R 103 772 788.00

Mar-12 8 297.13 $23 385 774.00 R 181 102 069.30

TOTAL 141 182.76 $379 691 781.60 R 2 555 282 479.37



South Africa’s total imports of polished diamonds for the period April 2011 to March 2012 totalled 141,182.76 carats, valued at about US$379,691,781.60. We have seen an increase in the number of shipments that were registered and declared with the Regulator. The polished imports increased by 22.27 % compared with the previous year. These imports included diamonds that were imported into South Africa for commission work and for consultation.



The Government Diamond Valuator (GDV) was appointed by the Regulator in July 2008 in term of Section 5(1) (c) of the Diamonds Act, which provides for the Regulator to appoint a person who has expertise in diamond market prices as a government diamond valuator.

The GDV functions are:

• Rough exports – value all unpolished diamonds (at the Diamond Exchange and Export Centre) declared for export to ensure fair market value;

• Polished exports – examine and value all polished diamonds to be exported to ensure that all polished diamond are exported at fair market value;

• Temporary exports (Deferments) – examine and value all unpolished diamonds that are temporarily exported for expert opinion or marking;

• Rough imports – examine and value all imported unpolished diamonds to ensure fair market value. All rough imports of unpolished diamonds are meticulously sorted and valued by the GDV to ensure that the goods being imported are of fair market value. Since importers receive credits on their import, it is important for the GDV to ensure an accurate valuation;

• State Diamond Trader (SDT) – examine and value the 10% of production presented to the SDT by all diamond producers, upon invitation from the SDT. The GDV conducts a valuation on the 10% presented from the producer and collates as much data of the remaining 90% as possible to ensure a representative sample. The value produced by GDV is communicated to both parties and is regarded as fair market value;

• South African Police Services (SAPS) – provide diamond valuation services on all con scated objects. Testify in court as and when required. Appointments are made as and when required by the SAPS requesting a valuation on all objects con scated by them. Af davits are produced in each case as a reference in the event that a subpoena is issued. The particular GDV member who conducted the valuation will give testimony in court and provide evidence surrounding the valuation of the exhibit/s;

• Provide technical advice regarding the value of diamonds to all stakeholders particularly SARS and the Department of Minerals Resources.

GOVERNMENT DIAMOND VALUATOR


PER

FOR

MA

NC

E IN

FOR

MAT

ION

: GO

VER

NM

ENT

DIA

MO

ND

VA

LUAT

OR

Stra

tegi

c obj

ectiv

esAc

tiviti

esMe

asur

esAn

nual

targ

etAc

tual

perfo

rman

ceCo

nstra

ints

& p

ropo

sed

rem

edies

Ensu

re co

mpl

iance

wi

th le

gisla

tive

requ

irem

ents

verify

value

of a

ll dia

mond

s offe

red

to SD

T by

prod

ucer

s

Numb

er of

valua

tions

co

nduc

ted

100 %

of di

amon

ds

offer

ed11

7 SDT

valua

tions

cond

ucted

Achie

ved

Verify

ing th

e valu

e of a

ll un

polis

hed d

iamon

ds

impo

rts.

Numb

er of

impo

rts

veri

ed10

0% of

impo

rts33

3 par

cels

of im

ports

veri

ed

Achie

ved

Identi

fy, de

scrib

e an

d valu

e exh

ibits

con

scate

d by S

APS

and c

omple

te co

urt

af da

vits

Numb

er of

exhib

its

valua

ted10

0% of

exhib

its15

0 exh

ibits

exam

ined a

nd va

luated

Achie

ved

Impr

ove

orga

nisa

tiona

l ca

pacit

y for

max

imum

ex

ecut

ion

brilli

ance

Monit

or an

d ana

lyse

price

s to a

djust

the

GDV

diamo

nd p

rice

book

month

ly up

dated

price

bo

okMo

nthly

1212

price

book

s upd

ated

Achie

ved

HIG

HLI

GH

TS

The

2011

/201

2 n

anci

al y

ear s

tarte

d of

f with

stro

ng d

eman

d fo

r rou

gh d

iam

onds

, alth

ough

slig

htly

bel

ow th

e le

vels

see

n in

pre

viou

s m

onth

s.

Rou

gh d

iam

ond

pric

es c

ontin

ued

to ri

se in

Apr

il as

obs

erve

d in

tend

ers

held

by

prod

ucer

s w

ho u

se th

e te

nder

sys

tem

s. T

he a

vera

ge in

crea

se

real

ised

by

prod

ucer

s w

as b

etw

een

2 an

d 3

perc

ent.

This

mea

nt th

at th

e G

DV

nee

ded

to a

djus

t the

ir pr

ice

book

to a

lign

with

mar

ket p

rices

.

By

June

201

1, th

ere

was

con

cern

abo

ut th

e ov

erhe

atin

g ro

ugh

diam

ond

mar

ket,

even

thou

gh d

eman

d re

mai

ned

stea

dy. W

e al

so w

itnes

sed

the

pers

iste

nt h

igh

prem

ium

s on

Dia

mon

d Tr

adin

g C

ompa

ny (D

TC) s

ight

box

es, f

ollo

wed

by

pric

e hi

kes

by B

HP

Bill

iton.

We

estim

ated

a 3

5%

incr

ease

in ro

ugh

diam

onds

bet

wee

n th

e be

ginn

ing

of J

anua

ry a

nd J

une

2011

. Dur

ing

Aug

ust t

here

was

sud

denl

y a

sign

i ca

nt d

ecre

ase

in

tradi

ng in

the

deal

er m

arke

t afte

r a b

oom

ing

perio

d. W

e w

ere

also

info

rmed

that

man

ufac

ture

rs in

Indi

a w

ere

burd

ened

with

low

liqu

idity

, and

ba

nks

tight

ened

thei

r len

ding

to th

e in

dust

ry.



The GDV was faced with a challenge when they reacted to market conditions and reduced prices to synchronise them with prevailing conditions, only to have a major producer decide to maintain its high prices and not react to the market. The GDV had to make a decision as to whether they should declare a dispute on prices or not. After long negotiations with the producer concerned, and presenting the situation to the Regulator for further deliberations and advice, it was concluded that the producer should be allowed to market their production at those prices and to wait and see if the market would accept the prices or not. The producer managed to sell all their diamonds at those prices and the fair market value of those diamonds was subsequently accepted.

Despite the above challenges the Regulator is proud that during the 2010/2011 nancial year no fair market value disputes were declared while the GDV performed its function of verifying prices.

Section 59B(5) of the Diamond Act states: “The government diamond valuator shall verify the prices speci ed in terms of subsection (2).” Veri cation was performed by the GDV team to determine the fair market value (FMV) of all diamonds offered by the diamond producer to the State Diamond Trader.

Table 1 below demonstrates the legislative requirements of Section 59B of the Diamonds Second Amendment Act of 2005 which provides for diamond producers to offer unpolished diamonds to the SDT. A comparative analysis between the 2010/2011 and 2011/2012 nancial years is illustrated in Graph 1.1

The table shows us what diamond producers produced and subsequently offered to the SDT, which resulted in the SDT purchasing or declining. This process was performed under the watchful eye of the Regulator through the GDV.

Table 1: Producer Summary (Carats) of Unpolished Diamonds Offered to the SDT

100% CARATS SELECTED CARATS PURCHASED

2010/2011 2011/2012 2010/2011 2011/2012 2010/2011 2011/2012

1st QUARTER 2 562 081.45 1 252 547.48 255 018.05 125 267.67 228 752.22 135 869.88

2nd QUARTER 2 812 850.61 2 251 603.83 280 550.25 236 101.25 82 046.45 83 332.96

3rd QUARTER 2 137 782.35 1 639 925.65 214 468.85 163 800.59 351 276.84 1 743.33

4th QUARTER 1 990 664.67 1 349 255.16 198 778.80 134 313.65 198 268.97 71 945.36

Total 9 503 379.08 6 493 332.12 948 815.95 659 483.16 860 344.48 292 891.53

The above table is a comparison of the activities of the 2010/2011 and 2011/2012 nancial years that concern the SDT and diamond producers as per the legislative requirements. We can clearly see the huge difference between the production of 2010/2011 compared to 2011/2012. Production in 2011/2012 was 32% less than in 2010/2011. This can be attributed to the strategy adopted by some producers to focus on maintenance and waste mining during the period of market softness.



GRAPH 1.1 PRODUCTION (CARATS) BY PRODUCERS 2010/11 VS 2011/12

Graph 1.1 demonstrates that there was a 32% decrease in carats produced in the 2011/2012 compared to 2010/2011. This decrease may be attributed in part to some producers performing routine maintenance on mines to achieve some improvement on safety results.

Graph 1.2 PRODUCTION SELECTED BY STATE DIAMOND TRADER 2010/11 VS 2011/12

Graph 1.2 demonstrates that there was a 30% decrease in the 10% of carats of unpolished diamonds offered to the SDT for 2011/2012 compared to the previous nancial year.



GRAPH 1.3 2010/11 VS 2011/12 PURCHASES BY THE STATE DIAMOND TRADER

Graph 1.3 above demonstrates that although the SDT managed to purchase 10% of the unpolished diamonds that were offered during the previous nancial year, the results for the 2011/2012 nancial year were different as they only managed to purchase 4% of what was offered to them by the producers.

Table 2: Producer Summary (VALUE US$) of Unpolished Diamonds offered to the SDT

100% VALUE (US$) SELECTED VALUE (US$) PURCHASED

2010/2011 2011/2012 2010/2011 2011/2012 2010/2011 2011/2012

1st QUARTER 306 122 181.30 256 337 268.20 29 213 725.17 24 247 011.79 29 012 902.52 26 090 969.63

2nd QUARTER 333 926 701.85 483 299 894.98 32 396 394.76 47 914 091.43 9 487 851.50 19 615 301.02

3rd QUARTER 286 135 037.87 322 399 870.24 27 945 791.43 30 812 912.03 40 846 528.97 798 242.73

4th QUARTER 308 049 547.10 231 279 952.55 29 812 311.82 21 854 636.92 29 820 578.27 11 952 411.84

Total 1 234 233 468.12 1 293 316 985.97 119 368 223.18 124 828 652.17 109 167 861.26 58 456 925.22

Table 2 demonstrates the value (in US$) that the GDV had to verify to determine the fairness thereof before the SDT could decide whether they could purchase or decline. It also compares the US$ value of the 2010/2011 nancial year with the current nancial year.



GRAPH 2.1 PRODUCTION 2010/11 VS 2011/12 US$

Graph 2.1 clearly demonstrates that the rough diamond market was strong in the 2nd quarter of 2011/2012 compared to the same period of the previous nancial year which witnessed a considerable price decrease from July 2011. This decrease is attributed to the turmoil in the market and the Eurozone crisis. The decrease in prices continued to December 2011.

GRAPH 2.2 PRODUCTION VALUE (US$) SELECTED BY SDT 2010/11 VS 2011/12

Although we witnessed a decrease in volumes offered between the two nancial years, there was an increase in value terms. The values of diamonds veri ed by the GDV were indeed better than the previous nancial year.



GRAPH 2.3 2010/11 VS 2011/12 (US$ VALUE) PURCHASES BY SDT

This graph demonstrates that in the 2011/2012 the SDT spend 46% less in value (US$) than in 2010/2011.

Table 3: State Diamond Trader Purchases in Caratage 2011/2012

2010/2011 2011/2012

CARATS OFFERED

SDT PURCHASES

% PURCHASED

CARATS OFFERED

SDT PURCHASES

% PURCHASED

1ST QUARTER 2 562 081.45 228 752.22 8.93% 1 357 110.11 135 869.88 10.01%

2ND QUARTER 2 812 850.61 82 046.45 2.92% 2 363 147.59 83 332.96 3.53%

3RD QUARTER 2 137 782.35 351 276.84 16.43% 1 869 919.15 1 743.33 0.09%

4TH QUARTER 1 990 664.67 198 268.97 9.96% 1 348 978.07 71 945.36 5.33%

TOTAL 9 503 379.08 860 344.48 9.05% 6 939 154.92 292 891.53 4.22%

This table clearly demonstrates the decrease in percentage terms of unpolished diamonds available to the SDT during 2011/2012, when compared to 2010/2011. The SDT only managed to purchase 4% of unpolished diamonds offered to them by the diamond producers.



TAB

LE 4

: OB

JEC

TS A

ND

DIA

MO

ND

S C

ON

FISC

ATED

BY

THE

SAPS

201

0/11

VS

2011

/12

ACTI

VITY

2010

/2011

ACTI

VITY

2011

/2012

NAME

OF

PROV

INCE

2010

/2011

OB

JECT

S

EXHI

BITS

TOTA

LS20

11/20

12

OBJE

CTS

EXHI

BITS

TOTA

LS

DIAM

ONDS

NON

DIAM

ONDS

CARA

TSR

VALU

EDI

AMON

DSNO

N DI

AMON

DSCA

RATS

R VA

LUE

GAUT

ENG

651

408

243

41.49

292 2

94.08

418

356

6229

9.84

363 4

58.75

LIMP

OPO

649

064

90

02

02

00

FREE

STA

TE85

5827

49.87

110 7

95.25

662

9556

755

.7219

756.7

8

NORT

HERN

CAP

E28

313

115

236

.0274

516.0

058

241

40

171.4

762

6 793

.00

EAST

ERN

CAPE

4423

2122

.7736

099.0

00

00

00.0

0

NORT

H W

EST

136

1911

72.5

94 6

87.24

372

211

161

57.33

12 97

5.18

MPUM

ALAN

GA0

00

00

00

00

0

KWAZ

ULU

NATA

L4

40

2.19

984

112

92.7

889

4.74

WES

TERN

CAP

E12

141

8061

.171 3

20 37

4.30

455

270

175

2.32

12 60

6.00

TOTA

L19

7368

412

891 1

00.17

21 67

4 603

.3322

5011

9597

658

9.46

1 036

484.4

5

The

Reg

ulat

or a

lso

prov

ides

val

uatio

n se

rvic

es fo

r di

amon

ds to

oth

er s

tate

ent

ities

thro

ugh

the

GD

V. A

n ex

ampl

e of

suc

h a

serv

ice

is th

e ev

alua

tion

of S

AP

S e

xhib

its fo

r cou

rt pu

rpos

es w

hich

is d

emon

stra

ted

by th

e Ta

ble

5 ab

ove.

Tabl

e 4

also

illu

stra

te a

12%

incr

ease

of t

he a

mou

nt o

f con

sca

ted

obje

cts

com

pare

d to

the

2010

/201

1 n

anci

al y

ear a

nd a

lso

indi

cate

that

of

the

obje

cts

pres

ente

d to

the

GD

V, th

ere

was

an

incr

ease

in d

iam

onds

com

pare

d to

the

prev

ious

na

ncia

l yea

r.



Dur

ing

the

year

und

er r

evie

w, t

he in

tern

al a

nd e

xter

nal c

omm

unic

atio

n po

licy

was

dev

elop

ed a

nd a

ppro

ved.

A n

umbe

r of

initi

ativ

es to

ok

plac

e, s

uch

as th

e in

trodu

ctio

n of

the

orga

nisa

tion’

s ne

wsl

ette

r and

fac

ilita

ting

wor

ksho

ps fo

r the

Reg

ulat

or to

eng

age

with

pot

entia

l ent

rant

s to

the

diam

ond

and

prec

ious

met

als

indu

strie

s.

PER

FOR

MA

NC

E IN

FOR

MAT

ION

: KIM

BER

LEY

PRO

CES

S C

ERTI

FIC

ATIO

N S

CH

EME

(KPC

S) A

ND

C

OM

MU

NIC

ATIO

NS

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Impr

ove o

rgan

isatio

nal

capa

city f

or m

axim

um

exec

ution

brilli

ance

Deve

lop in

terna

l an

d exte

rnal

co

mmun

icatio

n str

ategy

/plan

and p

olicy

Appr

oved

co

mmun

icatio

ns

strate

gy an

d poli

cy

Imple

menta

tion

Achie

ved.

Com

munic

ation

s str

ategy

/plan

appr

oved

Reva

mp/re

-des

ign

logo

Appr

oved

new

or

reva

mped

logo

De

sign a

nd de

velop

Not a

chiev

edPr

oject

in pr

ogre

ss, to

be n

alise

d in

the ne

w na

ncial

year

Facil

itate

works

hops

an

d eve

ntsNu

mber

of w

orks

hops

an

d eve

nts fa

cilita

ted

5 wor

ksho

ps

6 loc

al ex

hibitio

ns

2 inte

rnati

onal

exhib

itions

2 pub

licati

ons

Achie

ved.

9 wo

rksho

ps In

terna

l: Se

curity

leav

e, Pa

rking

polic

y co

nduc

ted

Achie

ved,

6 loc

al ex

hibitio

ns he

ld (M

ining

Inda

ba, B

udge

t Vote

, MQA

- C

ape T

own,

MQA

- Joh

anne

sbur

g, Ro

seba

nk C

olleg

e, Ma

ngau

ng

Care

er W

eek)

Not A

chiev

ed

Achie

ved.

SADP

MR fe

ature

d in 2

pu

blica

tions

(New

swee

k and

Mini

ng

Decis

ions m

agaz

ines)

Trips

could

not

t in th

e Bud

get

alloc

ation

. Will

be re

viewe

d dur

ing

plann

ing in

a ca

se of

insu

f cien

t bu

dget

Ensu

re co

mplia

nce

with

legisl

ative

re

quire

ments

Prep

are f

or th

e KPC

S Re

view

visit

Comp

leted

comp

lianc

e ch

eckli

st10

0% co

mplia

nce w

ith

KPCS

Achie

ved,

comp

lianc

e che

cklis

t co

mplet

ed

KIMBERLEY PROCESS CERTIFICATION SCHEME (KPCS) AND COMMUNICATIONS


Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Partic

ipate

in re

view

visits

/miss

ion an

d sp

ecial

envo

ys

Numb

er of

mee

tings

, re

view

visits

/miss

ion

and s

pecia

l env

oys

partic

ipated

in

4 rev

iew vi

sits

2 inte

rnati

onal

meeti

ngs

8 tele

phon

e co

nfere

nces

Not a

chiev

ed

Achie

ved.

2 int

erna

tiona

l and

ple

nary

meeti

ngs p

artic

ipated

in

Achie

ved.

15 te

lecon

feren

ces h

eld

No re

ques

ts we

re fo

rwar

ded t

o RSA

an

d a nu

mber

of re

view

visits

wer

e po

stpon

ed.

Facil

itate

techn

ical

assis

tance

(mult

ilater

al)Nu

mber

of pa

rticipa

nts

assis

ted

Zimba

bwe a

nd D

RCAc

hieve

d. 3 p

artic

ipants

assis

ted

(DRC

/Zim

/Leso

tho)

Subm

it qua

rterly

sta

tistic

al re

port

to KP

CS (

WGM

)

Comp

leted

quar

terly

statis

tical

repo

rt4

Achie

ved.

4 qua

rterly

stati

stica

l re

ports

comp

leted

and s

ubmi

tted

Kim

berle

y P

roce

ss C

erti

cat

ion

Sch

eme

(KP

CS

) is

an in

ter-

gove

rnm

enta

l sys

tem

use

d to

cer

tify

roug

h di

amon

ds a

re fr

om le

gitim

ate

sour

ces

and

that

thei

r pro

ceed

s ar

e no

t use

d to

fund

war

s ag

ains

t leg

itim

ate

gove

rnm

ents

.

By

the

end

of th

e ye

ar 2

011,

Kim

berle

y P

roce

ss h

ad 5

0 pa

rtici

pant

s (in

clud

ing

the

Eur

opea

n U

nion

, whi

ch re

pres

ents

its

27 M

embe

r Sta

tes)

; th

e K

PC

S m

embe

rshi

p co

mpr

ised

of 5

0 m

embe

r cou

ntrie

s, a

coa

litio

n of

non

-gov

ernm

enta

l org

anis

atio

ns (N

GO

’s) a

nd th

e di

amon

d in

dust

ry.

2011

was

arg

uabl

y th

e m

ost e

vent

ful y

ear i

n th

e hi

stor

y of

the

KP

CS

as

it sa

w th

e im

pass

e on

Zim

babw

e di

amon

ds

nally

bei

ng re

solv

ed,

and

Glo

bal W

itnes

s, a

mem

ber o

f the

Civ

il S

ocie

ty C

oalit

ion

with

draw

ing

its p

artic

ipat

ion

from

the

Kim

berle

y P

roce

ss.

Dur

ing

its te

nure

as

the

Kim

berle

y P

roce

ss c

hair,

the

Dem

ocra

tic R

epub

lic o

f Con

go a

ssum

ed it

s du

ties

with

the

seat

of t

he d

eput

y ch

air

bein

g va

cant

. Thi

s ca

me

afte

r the

201

0 pl

enar

y m

eetin

g w

as n

ot a

ble

to e

ndor

se th

e 20

11 v

ice

chai

r. It

beca

me

the

rst y

ear e

ver f

or th

e K

P to

not

hav

e an

app

oint

ed d

eput

y ch

air.

The

Uni

ted

Sta

tes

of A

mer

ica

then

bec

ame

the

rst c

ount

ry to

ser

ve a

s th

e K

imbe

rley

Pro

cess

dep

uty

chai

r for

a p

erio

d of

less

than

a y

ear,

as th

is re

spon

sibi

lity

was

onl

y en

dors

ed a

t the

201

1 pl

enar

y m

eetin

g. T

he U

nite

d S

tate

s of

Am

eric

a w

as

also

end

orse

d as

the

2012

Kim

berle

y P

roce

ss (K

PC

S) c

hair.

Sou

th A

frica

bec

ame

the

rst a

nd o

nly

coun

try th

us fa

r to

be s

elec

ted

to s

erve

as

the

KP

chai

r for

the

seco

nd ti

me.

Thi

s pe

riod

will

coi

ncid

e w

ith th

e 10

th a

nniv

ersa

ry o

f the

Kim

berle

y P

roce

ss.



HIGHLIGHTS

i. The United States of America SA was endorsed as the 2012 KP chair and South Africa as its deputy chair.

ii. Swaziland became the 50th member of the KPCS.

iii. Review visits to Botswana and Lesotho where conducted.

iv. Zimbabwe was allowed to freely import and export its diamonds as per the agreement reached at the plenary.

v. An administrative decision on the review of the KP core document by the Ad hoc Committee of KP Reform was adopted.

vi. The Working Group of Diamond Experts’ scienti c sub-group on origin characterisation, led by South Africa, engaged the UN Group of Experts and the UN Sanctions Committee on Côte d’Ivoire to start exporting diamonds from Côte d’Ivoire under the export exemption programme for state-of-the art scienti c origin determination research.

vii. Ghana and Namibia joined the Working Group of Diamond Experts. Ghana also joined the Working Group on Monitoring



Rou

gh D

iam

ond

Impo

rts

ROUG

H DI

AMON

DS IM

PORT

S - J

ANUA

RY T

O DE

CEMB

ER 20

11

1 Qua

rter

2 Qua

rter

3 Qua

rter

4 Qua

rter

2011

Parti

cipan

tsVo

lume,

ctsVa

lue, U

S$Vo

lume,

ctsVa

lue, U

S$Vo

lume,

ctsVa

lue, U

S$Vo

lume,

ctsVa

lue, U

S$Vo

lume,

ctsVa

lue, U

S$

Ango

la0.0

00.0

00.0

00.0

013

6.60

10 22

4.08

0.00

0.00

136.6

010

224.0

8

Austr

alia

0.00

0.00

0.00

0.00

0.00

0.00

3.09

3 093

.003.0

93 0

99.18

Botsw

ana

0.00

0.00

2 469

.0014

8 712

.001 0

61.49

4 024

970.2

085

1.71

587 6

46.46

4 382

.204 7

61 32

8.66

Cana

da0.0

00.0

00.0

00.0

01 0

13.34

118 5

97.80

0.00

0.00

1 013

.3411

8 597

.80

China

, Peo

ple’s

Repu

blic o

f20

5.26

2 592

342.0

026

387.1

56 2

23 19

4.14

8 259

.456 7

25 03

5.18

0.00

0.00

34 85

1.86

15 54

0 571

.32

Cong

o, De

mocra

tic R

epub

lic of

17 44

7.31

2 551

660.5

140

191.4

05 2

95 72

1.62

1 280

.4623

2 367

.391 1

52.53

225 1

00.55

60 07

1.70

8 304

850.0

7

Euro

pean

Com

munit

y16

3 118

.3196

250 5

85.50

105 2

51.39

99 81

2 231

.8013

7 305

.7012

2 610

203.6

759

647.6

539

872 1

79.20

465 3

23.05

358 5

45 20

0.17

India

2 259

.8031

5 483

.1869

296.9

94 0

20 75

7.29

30 47

5.61

2 990

575.3

324

457.9

550

8 030

.0712

6 490

.357 8

34 84

5.87

Israe

l6 7

91.25

12 06

3 744

.0416

567.8

412

244 5

07.10

3 791

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69 60

1.26

5 025

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70 05

5.90

32 17

6.10

36 94

7 908

.30

Leso

tho5 4

09.97

1 750

000.0

05 1

10.12

1 400

000.0

00.0

00.0

00.0

00.0

010

520.0

93 1

50 00

0.00

Liber

ia0.0

00.0

00.0

00.0

045

7.23

102 1

86.80

0.00

0.00

457.2

310

2 186

.80

Nami

bia38

1.70

1 216

484.4

347

9.50

618 5

76.00

8.36

2 015

.2436

5.24

785 5

05.93

1 234

.802 6

22 58

1.60

Sier

ra Le

one

16.10

30 27

6.85

62.57

74 66

9.00

15.40

1 909

.6017

.3860

767.0

411

1.45

167 6

22.49

Switz

erlan

d0.0

00.0

020

195.7

011

400 4

99.80

90.28

2 000

000.0

00.0

00.0

020

285.9

813

400 4

99.80

Tanz

ania

0.00

0.00

0.00

0.00

14.00

13 01

9.00

65.97

23 77

3.23

79.97

36 79

2.23

Unite

d Ara

b Emi

rates

12 72

8.96

9 210

415.7

03 3

46.29

4 537

044.5

05 5

20.19

12 42

1 032

.6925

546.6

512

316 4

99.07

47 14

2.09

38 48

4 991

.96

Unite

d Stat

es of

Ame

rica

61.59

496 8

90.00

123.4

35 6

15 20

0.00

523.3

812

855 6

12.00

363.4

63 9

60 92

7.38

1 071

.8622

928 6

29.38

Zimba

bwe

0.00

0.00

3 636

.161 0

98 12

0.32

312 5

13.60

22 09

7 723

.0033

5 371

.765 7

31 51

6.06

651 5

21.52

28 92

7 359

.38

Tota

l20

8 420

.2512

6 477

882.2

129

3 117

.5415

2 489

233.5

750

2 466

.7319

1 075

073.2

445

2 868

.7671

845 0

93.89

1 456

873.2

854

1 887

289.0

9



The total imports (carats) increased from 560 023.33 carats in 2010 to 1.45 million carats in 2011. This increase is attributable in part to Zimbabwean diamonds entering the markets.

South Africa imported 651 521.52 carats (45%) from Zimbabwe in the year 2011, the largest number of carats in comparison to other countries. Zimbabwe managed to overtake imports from the European Community (32%) which has been in the lead for many years.

In 2011, Zimbabwe became the top-ranking supplier of rough diamonds to South Africa in terms of volume, while imports from that country climbed to 651 521.52 carats. The European Community however remained the top-ranking supplier in terms of value (US$358 million) in 2011.

The European community was followed by Israel and the United Arab Emirates at 7% each.

Other: Angola, Australia, Botswana, Canada, China, Israel, Lesotho, Liberia, Namibia, Sierra Leone, Switzerland, Tanzania and the United States of America

Other: Angola, Australia, Botswana, Canada, Democratic Republic of Congo, India, Lesotho, Liberia, Namibia, Sierra Leone, and Tanzania



Rou

gh D

iam

ond

Expo

rts

ROUG

H DI

AMON

DS E

XPOR

TS -

JANU

ARY

2011

TO

DECE

MBER

2011

1 Qua

rter

2 Qua

rter

3 Qua

rter

4 Qua

rter

Tota

l

Parti

cipan

tsVo

lume,

ctsVa

lue, U

S$Vo

lume,

ctsVa

lue, U

S$Vo

lume,

ctsVa

lue, U

S$Vo

lume,

ctsVa

lue, U

S$Vo

lume,

ctsVa

lue, U

S$

Austr

alia

0.00

0.00

-0.0

03.0

93 0

93.00

985.3

393

597.8

098

8.42

96 69

0.80

Botsw

ana

21.44

148 7

12.00

796.9

011

0 676

.500.0

00.0

030

.461 8

88 52

0.00

848.8

02 1

47 90

8.50

Cana

da28

.1025

000.0

015

.242 3

79.76

84.94

18 59

9.00

0.00

0.00

128.2

845

978.7

6

China

, Peo

ple’s

Repu

blic o

f18

713.2

35 2

59 37

7.41

4 788

.3872

7 726

.0013

639.5

51 7

20 15

4.00

130 5

76.06

938 4

73.90

167 7

17.22

8 645

731.

31

Euro

pean

Com

munit

y1 2

54 80

6.38

188 1

87 83

0.81

1 806

039.6

827

6 059

530.2

01 3

09 38

6.91

244 6

06 37

6.03

1 613

826.5

428

1 878

734.0

05 9

84 05

9.51

990 7

32 47

1.04

India

9 785

.443 1

04 74

7.48

21 64

8.52

5 390

543.8

853

949.1

95 4

63 96

5.62

31 40

6.05

9 653

650.3

311

6 789

.2023

612 9

07.31

Israe

l18

9 972

.4984

839 4

48.42

72 23

1.55

38 20

5 410

.7227

993.9

522

209 2

59.79

41 03

2.41

35 05

1 032

.8033

1 230

.4018

0 305

151.7

3

Leso

tho52

.1413

8 688

.00-

0.00

0.00

0.00

0.00

0.00

52.14

138 6

88.00

Nami

bia35

2.29

557 5

00.00

415.0

010

4 000

.000.0

00.0

045

0.37

18 00

0.00

1 217

.6667

9 500

.00

Switz

erlan

d28

998.5

316

661 9

15.00

38 04

5.91

33 02

2 772

.5120

1 919

.2528

258 2

68.00

102 1

28.10

15 43

5 187

.0037

1 091

.7993

378 1

42.51

Thail

and

306.8

112

6 688

.002 1

68.47

883 5

53.00

1 015

.5846

3 445

.004 3

38.30

1 318

140.0

07 8

29.16

2 791

826.0

0

Unite

d Ara

b Emi

rates

92 24

6.60

23 31

7 379

.4116

5 680

.4835

691 5

20.41

115 6

89.80

33 65

0 871

.4947

4 673

.6543

926 4

97.04

848 2

90.53

135 5

86 26

8.35

Unite

d Stat

es of

Ame

rica

1 709

.4995

4 120

.601 9

34.53

407 8

68.00

6 797

.536 8

20 73

4.90

1 228

.567 9

39 56

6.00

11 67

0.11

16 12

2 289

.50

Vietn

am15

5.10

148 0

55.00

-0.0

018

0.48

314 9

92.00

588.9

943

7 000

.0092

4.57

900 0

47.00

Tota

l1 5

97 14

8.04

323 4

69 46

2.13

2 113

764.6

639

0 605

980.9

81 7

30 66

0.27

343 5

29 75

8.83

2 401

264.8

239

8 578

398.8

77 8

42 83

7.79

1 455

183 6

00.81




South Africa exported more than 5.9 million carats of rough diamonds to the European Community, which amounts to 76% of total rough diamond exports (carat). The European Community was followed by the United Arab Emirates with more than 848 000 carats exported (11%).

Rough diamond exports to the European community amounted to more than $990.7 million ( 68%) followed by Israel at more $180.3 million (12%) and the United Arab Emirates at more than $136.6 million (9%).

Other: Australia, Botswana, Canada, India, Lesotho, Namibia, Tanzania, United States of America and Vietnam

Other: Australia, Botswana, Canada, China, Lesotho, Namibia, Thailand, United States of America and Vietnam


The

Lega

l Ser

vice

s D

ivis

ion

prov

ides

ove

rall

lega

l sup

port

to th

e R

egul

ator

. Thi

s en

tails

pro

vidi

ng le

gal o

pini

ons,

lega

l res

earc

h, a

ssis

ting

in

all l

itiga

tion

the

Reg

ulat

or is

invo

lved

in, c

onsu

lting

with

the

Dep

artm

ent o

f Min

eral

Res

ourc

es re

gard

ing

any

amen

dmen

ts to

the

legi

slat

ion

havi

ng a

dire

ct im

pact

on

the

Reg

ulat

or, a

nd a

dvis

ing

appl

ican

ts o

n co

mpl

ianc

e w

ith le

gisl

atio

n.

In 2

008

the

Reg

ulat

or h

ad a

few

cou

rt ap

plic

atio

ns b

roug

ht a

gain

st it

, mai

nly

chal

leng

ing

the

cons

titut

iona

lity

of th

e am

endm

ents

to th

e D

iam

onds

Act

198

6 (A

ct N

o 56

of 1

986)

as

amen

ded

and

the

esta

blis

hmen

t of t

he D

iam

ond

Exc

hang

e an

d E

xpor

t Cen

tre (

DE

EC

). T

he

Reg

ulat

or h

as s

ucce

ssfu

lly d

efen

ded

mos

t cas

es b

roug

ht a

gain

st it

. The

re is

cur

rent

ly o

ne c

ase

pend

ing

rega

rdin

g th

e co

nstit

utio

nalit

y of

th

e am

endm

ents

.

PER

FOR

MA

NC

E IN

FOR

MAT

ION

: LEG

AL

SER

VIC

ES

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Ensu

re co

mplia

nce

with

legisl

ative

re

quire

ments

Prov

ide le

gal a

dvice

on

the s

tatute

s to t

he

Regu

lator

Numb

er of

case

s ad

vised

on10

0% of

all c

ases

re

ferre

dAc

hieve

d. 13

5 (10

0%) o

f cas

es

advis

ed on

Facil

itatio

n of le

gal

opini

on fo

r the

Re

gulat

or

Numb

er of

lega

l op

inion

s obta

ined

100%

of al

l cas

es

refer

red

Ach

ieved

. 4 (1

00%

) lega

l opin

ions

obtai

ned

Partic

ipate

in the

dr

afting

of le

gislat

ion

and a

mend

ments

for

the R

egula

tor

Numb

er of

revie

w me

eting

s atte

nded

10

0% of

all in

vites

re

ceive

d Ac

hieve

d. 4 (

100%

) rev

iew

meeti

ngs

atten

ded.

Partic

ipated

in

Depa

rtmen

t of J

ustic

e-or

ganis

ed

revie

w of

all le

gislat

ion th

at se

eks

to co

mbat

illega

l mini

ng an

d illic

it mi

ning i

n pre

cious

meta

ls

Facil

itatio

n of le

gal

repr

esen

tation

for t

he

Regu

lator

by ex

terna

l leg

al co

unse

l

Numb

er of

brie

ngs

cond

ucted

100%

of al

l cas

es

refer

red

Achie

ved.

5 (10

0%) o

f all c

ases

re

ferre

d. Se

cure

d leg

al co

unse

l on

beha

lf of th

e Reg

ulator

, for la

bour

-re

lated

issu

es

LEGAL SERVICES


The

func

tion

of S

ecur

ity R

isk

Man

agem

ent i

s to

pro

vide

a m

anag

emen

t sup

port

serv

ice

agai

nst a

ll ki

nd o

f sec

urity

risk

, vul

nera

bilit

ies

and

thre

ats.

Hig

hlig

hts

The

SA

DP

MR

has

fully

impl

emen

ted

a na

tiona

l vet

ting

stra

tegy

by

ensu

ring

that

all

of c

ials

und

ergo

per

sonn

el s

uita

bilit

y ch

ecks

bef

ore

appo

intm

ent.

This

incl

udes

che

ckin

g cr

imin

al re

cord

s, c

itize

nshi

p an

d cr

edit

reco

rds

whi

le H

R v

eri

es q

uali

cat

ions

and

pre

viou

s em

ploy

men

t. N

o em

ploy

ee(s

) with

an

illic

it-re

late

d ac

tivity

reco

rd h

as b

een

appo

inte

d. In

the

year

und

er re

view

sev

ente

en (1

7) o

f ci

als

obta

ined

pos

itive

se

curit

y cl

eara

nces

, pro

mot

ing

trust

and

redu

cing

vul

nera

bilit

y of

the

orga

nisa

tion.

PER

FOR

MA

NC

E IN

FOR

MAT

ION

: SEC

UR

ITY

RIS

K M

AN

AG

EMEN

T

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Imple

menta

tion o

f na

tiona

l vett

ing st

rateg

yIde

ntify

critic

al po

sts fo

r ve

tting

Certi

cate

issue

d20

Not A

chiev

ed. 1

7 cer

ti ca

tes is

sued

Fo

ur (4

) app

licati

ons f

or se

curity

cle

aran

ce fo

rms a

re in

proc

ess.

Conti

nued

follo

w-up

s will

be

cond

ucted

with

Stat

e Sec

urity

Ag

ency

Ensu

re co

mplia

nce w

ith

Minim

um In

forma

tion

Secu

rity S

tanda

rds

(MIS

S)

Imple

ment

secu

rity

polic

yDe

velop

secu

rity

proc

edur

es2

Achie

ved.

2 sec

urity

proc

edur

es

deve

loped

and a

ppro

ved

Imple

menta

tion o

f Mi

nimum

Phy

sical

Secu

rity S

tanda

rds

(MPS

S)

Imple

ment

phys

ical

secu

rity m

easu

res

Deve

lop co

mplia

nce

stand

ard

Monit

oring

of C

CTV

came

ra

Appr

oved

stan

dard

s

2 1

Achie

ved.

CCTV

came

ras

conti

nuou

sly m

onito

red.

Achie

ved.

Appr

oved

stan

dard

s in

place

SECURITY RISK MANAGEMENT


Purp

ose:

To

enab

le th

e or

gani

satio

n to

del

iver

on

its m

anda

te b

y pr

ovid

ing

stra

tegi

c hu

man

reso

urce

s m

anag

emen

t and

adm

inis

tratio

n to

th

e R

egul

ator

.

Hum

an R

esou

rces

Man

agem

ent p

rovi

des

serv

ices

rela

ting

to o

rgan

isat

iona

l dev

elop

men

t, re

crui

tmen

t and

sel

ectio

n, fa

cilit

atin

g pe

rform

ance

ev

alua

tions

of e

mpl

oyee

s th

roug

h a

perfo

rman

ce m

anag

emen

t and

dev

elop

men

t sys

tem

(PM

DS

), m

anag

ing

serv

ice

bene

ts, a

n em

ploy

ee

wel

lnes

s pr

ogra

mm

e (E

WP

), la

bour

rel

atio

ns m

anag

emen

t, an

d bu

ildin

g hu

man

res

ourc

es c

apac

ity t

hrou

gh t

rain

ing

and

deve

lopm

ent

inte

rven

tions

. W

e re

mai

n co

mm

itted

to e

nsur

ing

that

the

SA

DP

MR

has

peo

ple

who

mak

e a

diffe

renc

e fo

r all

thro

ugh

effe

ctiv

e, e

f ci

ent a

nd

prof

essi

onal

hum

an re

sour

ces

serv

ices

.

A hi

ghlig

ht d

urin

g th

e pe

riod

unde

r rev

iew

is th

e ap

prov

al o

f the

inte

grat

ed h

uman

reso

urce

s pl

an (H

RP

) by

the

Boa

rd.

PER

FOR

MA

NC

E IN

FOR

MAT

ION

FO

R H

UM

AN

RES

OU

RC

ES M

AN

AG

EMEN

T

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Impr

ove o

rgan

isatio

nal

capa

city f

or m

axim

um

exec

ution

brilli

ance

Deve

lop an

d imp

lemen

t hu

man r

esou

rces p

lan

(HRP

)

• Ap

prov

ed H

R Pl

an im

pleme

nted

• Re

vised

or

ganis

ation

al str

uctur

e im

pleme

nted

Deve

lopme

nt an

d im

pleme

ntatio

nAc

hieve

d. Hu

man r

esou

rces p

lan

appr

oved

and i

mplem

ented

.

Achie

ved.

Org

anisa

tiona

l stru

cture

re

vised

and i

mplem

ented

Imple

ment

HRD

polic

y/str

ategy

Numb

er of

perso

nnel

deve

loped

50%

im

pleme

ntatio

nAc

hieve

d. 49

perso

nnel

deve

loped

in

vario

us sk

ills ar

eas

Impr

ove t

he

imple

menta

tion o

f the

perfo

rman

ce

mana

geme

nt an

d de

velop

ment

syste

m (P

MDS)

Impr

oved

PMD

S im

pleme

nted

Imple

ment-

ation

of th

e PM

DS po

licy

Achie

ved.

PMD

S im

pleme

nted,

all

perfo

rman

ce ag

reem

ents

in pla

ce

and e

mploy

ees i

ncen

tivise

d in t

erms

of

the im

prov

ed P

MDS

syste

m

Deve

lop an

d Imp

lemen

t the

talen

t man

agem

ent

strate

gy (T

MS)

Appr

oved

TMS

De

velop

ment

and

imple

menta

tion o

f the

TMS

Not A

chiev

edFo

cus w

as on

the

nalis

ation

of th

e HR

plan

. The

draft

TMS

has b

een

nalis

ed an

d app

rova

l will

be so

ught

durin

g the

2012

/2013

HUMAN RESOURCES MANAGEMENT


Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Ensu

re co

mplia

nce w

ith

legisl

ative

requ

ireme

ntsDe

velop

and i

mplem

ent

HR po

licies

, pro

cess

es

and p

roce

dure

s

Appr

oved

polic

ies an

d gu

idelin

es

Deve

lopme

nt an

d im

pleme

ntatio

nAc

hieve

d. Si

x (6)

polic

ies ap

prov

ed

and i

mplem

ented

Prom

ote so

und

emplo

yer/e

mploy

ee

relat

ions

Perce

ntage

of re

solve

d re

porte

d cas

es10

0%No

t Ach

ieved

. 95

% of

case

s wer

e res

olved

and

one c

ase w

as su

bmitte

d dur

ing

March

2012

. To b

e na

lised

durin

g 20

12/20

13

Dur

ing

the

year

und

er re

view

a c

onsi

dera

ble

effo

rt w

as m

ade

to a

ttrac

t and

recr

uit e

mpl

oyee

s w

ith c

ritic

al s

kills

to d

eliv

er o

n th

e m

anda

te o

f th

e or

gani

satio

n. A

t 31

Mar

ch 2

012

empl

oym

ent e

quity

sta

f ng

ratio

s st

ood

at 9

4.3%

Bla

cks

to 5

.7%

Whi

tes;

60%

fem

ales

to 4

0% m

ales

; an

d 5

3.3%

cor

e fu

nctio

n to

46.

7% s

uppo

rt fu

nctio

n st

aff.



WORKFORCE PROFILE AND CORE & SUPPORT FUNCTIONS

The Regulator headcount currently stands at 105 employees, as indicated in the table below.

Occupational LevelsMale Female Foreign

Nationals TotalA C I W A C I W Male Female

Top management 4 0 0 0 0 0 0 0 0 0 4

Senior management 3 0 1 0 3 0 0 1 0 0 8

Professionally quali ed and experienced specialists and mid-management 12 0 1 1 12 1 0 1 0 0 28

Skilled technical and academically quali ed workers, junior management, supervisors, foremen, and superintendents 11 0 0 1 25 2 2 1 0 0 42

Semi-skilled and discretionary decision making 6 0 0 0 9 1 0 0 0 0 16

Unskilled and de ned decision making 1 0 0 1 5 0 0 0 0 0 7

TOTAL PERMANENT 37 0 2 3 54 4 2 3 0 0 105

Temporary employees 0 0 0 0 0 0 0 0 0 0 0

GRAND TOTAL 37 0 2 3 54 4 2 3 0 0 105

Chart 1: Workforce pro le/Employment Equity



RECRUITMENT AND SELECTION

The table below indicates the total number of employees recruited during the twelve-month period.



Top management 0 0 0 0 0 0 0 0 0 0 0



Skilled technical and academically quali ed workers, junior management, supervisors, foremen, and superintendents 1 0 0 0 2 0 0 0 0 0 3

Semi-skilled and discretionary decision-making 5 0 0 0 3 0 0 0 0 0 8

Unskilled and de ned decision-making 0 0 0 0 0 0 0 0 0 0 0

TOTAL PERMANENT 8 0 0 0 5 0 0 0 0 0 13

Temporary employees

GRAND TOTAL 8 0 0 0 5 0 0 0 0 0 13

Chart 2: Recruitment rate 2010/11 and 2011/2012



PROMOTIONS

The table below indicates the total number of employees promoted during the twelve months period.



Top management 0 0 0 0 0 0 0 0 0 0 0



Skilled technical and academically quali ed workers, junior management, supervisors, foremen, and superintendents

1 0 0 0 0 0 0 0 0 0 1



TOTAL PERMANENT 1 0 0 0 0 0 0 0 0 0 1


GRAND TOTAL 1 0 0 0 0 0 0 0 0 0 1

EMPLOYEE SERVICE TERMINATION

The table below indicates the total number of terminated employees during the twelve months period.



Top management 1 0 0 0 0 0 0 0 0 0 1

Senior management 0 0 0 0 0 0 0 0 0 0



0 0 0 0 0 0 0 0 0 0 0



TOTAL PERMANENT 1 1 0 0 0 0 0 0 0 0 2


GRAND TOTAL 3 1 0 0 1 0 0 0 0 0 5



Chart 3: Employee Service Termination per month



The table below indicates the Skills Development within SADPMR



Top management 3 0 0 0 0 0 0 0 0 0 3




4 0 0 0 11 1 0 0 0 0 16



TOTAL PERMANENT 17 0 0 0 22 1 0 1 0 0 41

Temporary employees 0 0 0 0 0 0 0 0 0 0

GRAND TOTAL 17 0 0 0 22 1 0 1 0 0 41

Chart 4: Skills Development Data in terms of Gender and Racial Groups



BURSARIES OFFERED IN 2011/2012 FINANCIAL YEAR

The table below indicates bursaries offered to employees

Field of StudyMale Female Foreign


PhD Engineering 0 0 1 0 0 0 0 0 0 0 1

Masters in Business Administration 1 0 0 0 0 0 0 0 0 0 1

Masters of Management in Business 0 0 0 0 1 0 0 0 0 0 1

LLM Corporate Law 0 0 0 0 1 0 0 0 0 0 1

BCom International Politics, 0 0 0 0 0 0 1 0 0 0 1

BCom General 0 0 0 0 2 0 0 0 0 0 2

BCom Accounting 1 0 0 0 0 0 0 0 0 0 1

BA Public Administration, & Communication Science 0 0 0 0 0 2 0 0 0 0 2

BTech: Human Resources Management 0 0 0 0 1 0 0 0 0 0 1

BTech: Public Management 0 0 0 0 1 0 0 0 0 0 1

LLB 1 0 0 0 0 0 0 0 0 0 1

ND: Human Resource Management, 0 0 0 0 2 0 0 0 0 0 2

ND: Administration 0 0 0 0 2 0 0 0 0 0 2

ND: Security Risk Management 1 0 0 0 0 0 0 0 0 0 1

ND: Public Administration 0 0 0 0 1 0 0 0 0 0 1

ND: Public Management 0 0 0 0 0 1 0 0 0 0 1

GRAND TOTAL 4 0 1 0 11 3 1 0 0 0 20

INTERNSHIP PROGRAMME

The table below indicates the total number of Interns during the twelve months period.



Internship Programme 4 0 0 0 7 0 0 0 0 0 11



PERFORMANCE MANAGEMENT

Performance appraisals for the period 1 April 2011 to 31 March 2012 were completed and the employees appraised accordingly in terms of the requirements of the PMDS policy.

LABOUR RELATIONS MANAGEMENT

The table below indicates the total number of disciplinary actions:



Disciplinary Action 4 1 1 0 3 0 0 0 0 0 9

List of misconducts addressed in 2011/2012

Misconducts Verdict

Unacceptable behaviour Dismissal

Breach of trust Dismissal

3 x Insolent behaviour 6 Months written warning

2 x Insubordination and insolence 6 Months written warning

Abusing the resources of the Regulator 3 Months written warning

Unacceptable conduct 3 Months written warning

Disloyalty 3 Months written warning

List of grievances lodged in 2011/2012 nancial year

Grievance Status

Improper and unethical conduct Resolved

Unacceptable behaviour/ conduct In Progress

Total sanctions issued in 2011/2012 nancial year

Type of sanction Number % of Total

Dismissal 2 20%

6 Months written warning 5 50%

3 Months written warning 3 30%

Total 10 100%



Withdrawal and addressed cases at CCMA

Cases Number % of Total

Addressed in the CCMA 1 33.3%

Withdrawn from CCMA 2 66.7%

Total 3 100%

Chart 5: Grievances and Misconducts 2009/10, 2010/11 and 2011/12

WORKSHOPS CONDUCTED DURING 2011/2012

• Government Employee Pension Fund workshop for Management Committee• Liberty Life workshop for all staff members • Leave policy workshop for all staff members • Induction programme for all new employees • Employee wellness programme workshop for managers



PER

FOR

MA

NC

E IN

FOR

MAT

ION

: O

VER

VIEW

OF

INFO

RM

ATIO

N A

ND

CO

MM

UN

ICAT

ION

TEC

HN

OLO

GY

At t

he b

egin

ning

of t

he

nanc

ial y

ear w

e pr

ocur

ed a

nd d

eplo

yed

ICT

infra

stru

ctur

e eq

uipm

ent t

hat r

equi

red

an u

pgra

de. T

his

incl

uded

aud

iting

of

the

serv

er, d

eskt

op e

nviro

nmen

t and

est

ablis

hing

ser

vice

leve

l agr

eem

ents

(S

LA�

s) w

ith v

ario

us s

ervi

ce p

rovi

ders

for

the

supp

ly a

nd

mai

nten

ance

of o

ur in

tern

et s

ervi

ce a

nd e

nd-u

ser e

quip

men

t. In

tern

et s

ervi

ce p

rovi

sion

was

suc

cess

fully

mig

rate

d to

the

Sta

te In

form

atio

n Te

chno

logy

Age

ncy

(SIT

A).

The

Kim

berle

y of

ce

was

suc

cess

fully

link

ed to

the

SA

DP

MR

hea

d of

ce

virtu

al p

rivat

e ne

twor

k (V

PN

).

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

indi

cato

r/ m

easu

reAn

nual

targ

etAc

tual

perfo

rman

ceCo

nstra

ints

& p

ropo

sed

rem

edies

Impr

ove o

rgan

isatio

nal

capa

city f

or m

axim

um

exec

ution

brilli

ance

Deve

lop an

d imp

lemen

t an

infor

matio

n ma

nage

ment

syste

m

Imple

mente

d web

-bas

ed ad

min

syste

m:

- Lic

ensin

g mod

ule-

DEEC

tend

er m

odule

- Di

amon

d & pr

eciou

s me

tals –

regis

ter m

odule

- GD

V mo

dule

- Fin

ance

– Lic

ence

tra

nsac

tions

& re

gister

bil

ling

April

2011

Not A

chiev

edTe

nder

re-a

dver

tised

, cou

ld no

t get

supp

lier d

ue to

lack

of re

spon

se to

the

rst

adve

rt. S

ervic

e pro

vider

to

be ap

point

ed in

the 2

012/2

013

nanc

ial ye

ar.

Train

ing en

d-us

ers o

n the

new

web-

base

d ad

min s

ystem

Perce

ntage

of en

d-us

ers

traine

d10

0%Ac

hieve

d

Upgr

ade I

CT

infra

struc

ture

Upgr

ade I

CT in

frastr

uctur

eIm

pleme

ntatio

n

Appr

oved

polic

ies

Appr

oved

pro

cedu

res

Appr

oved

DRP

Not A

chiev

ed

Delay

s in t

he po

wer in

stalla

tion f

or

the ne

w se

rvers

to be

insta

lled.

To be

addr

esse

d in t

he 20

12/20

13

nanc

ial ye

ar

Link s

atellit

e of c

esCo

nnec

tivity

to sa

tellite

of ce

s3 s

atellit

e of c

esAc

hieve

d

Link s

trateg

ic sta

keho

lders

Conn

ectiv

ity to

stak

ehold

ers

1 stra

tegic

stake

holde

r

Feas

ibility

stud

y

Not a

chiev

edRe

levan

t stak

ehold

er ap

proa

ched

. Aw

aiting

resp

onse

. Foll

ow-u

ps to

be

cond

ucted

durin

g the

2012

/2013

Up

grad

e of e

xistin

g de

sktop

comp

uters

& oth

er pe

riphe

rals

Numb

er of

desk

tops a

nd

perip

hera

ls up

grad

ed50

Achie

ved

En

sure

comp

lianc

e with

leg

islati

ve re

quire

ments

Deve

lop IC

T go

vern

ance

plan

Appr

oved

ICT

gove

rnan

ce pl

anIm

pleme

ntatio

nAc

hieve

d

INFORMATION COMMUNICATION TECHNOLOGY


PER

FOR

MA

NC

E IN

FOR

MAT

ION

: FIN

AN

CE

Stra

tegi

c obj

ectiv

esAc

tiviti

esPe

rform

ance

in

dica

tor/

mea

sure

Annu

al ta

rget

Actu

al pe

rform

ance

Cons

train

ts &

pro

pose

d re

med

ies

Ensu

re co

mplia

nce w

ith

legisl

ative

requ

ireme

ntsMa

nage

reve

nue,

expe

nditu

re, a

ssets

an

d liab

ilities

effec

tively

an

d ef c

iently

Comp

leted

comp

lianc

e tem

plate

Month

lyAc

hieve

d. Tw

elve (

12) c

ompli

ance

tem

plates

comp

leted

.

Revie

w an

d upd

ate al

l na

ncial

polic

ies an

d pr

oced

ures

Numb

er of

polic

ies

revie

wed a

nd ap

prov

ed5

Not A

chiev

ed.

Focu

s was

on th

e imp

lemen

tation

of

supp

ly ch

ain pr

oces

ses a

nd in

terna

l co

ntrols

stipu

lated

on th

e PFM

A an

d Tr

easu

ry Re

gulat

ion co

mplia

nce

chec

klist.

As a

resu

lt the

revie

w an

d ap

prov

al of

deve

loped

polic

ies w

as

delay

ed. T

he fo

ur (4

) poli

cies w

ill be

su

bmitte

d for

appr

oval

durin

g the

20

12/20

13 n

ancia

l yea

r

Impr

ove o

rgan

isatio

nal

capa

city f

or m

axim

um

exec

ution

brilli

ance

Align

budg

et to

appr

oved

stra

tegic

plan

Appr

oved

budg

et30

Sep

t 201

1Ac

hieve

d. Bu

dget

was a

ppro

ved

and s

ubmi

tted t

o the

shar

ehold

er.

Hig

hlig

hts

The

Reg

ulat

or h

as in

tens

i ed

com

plia

nce

with

the

Pub

lic F

inan

ce M

anag

emen

t Act

by

addr

essi

ng ir

regu

larit

ies

iden

ti e

d du

ring

the

2010

/201

1 au

dit.

As

a re

sult,

sup

ply

chai

n m

anag

emen

t w

as in

trodu

ced

durin

g th

e ye

ar u

nder

rev

iew

. Th

e ap

poin

ted

Bid

Adj

udic

atio

n C

omm

ittee

ad

min

iste

red

the

sour

cing

of g

oods

and

ser

vice

s. D

urin

g th

e ye

ar u

nder

revi

ew, s

even

teen

(17)

bid

s to

the

valu

e of

R7,

2 m

illio

n w

ere

awar

ded.

FINANCE


Strategic objectives Activities

Performance indicator/ measure

Annual target Actual performance

Constraints & proposed

remedies

Ensure compliance with legislative requirements

Review the internal audit charter

Annually reviewed and approved Audit Charter

1 Achieved. Audit charter reviewed and approved

Prepare an annual audit plan

Approved plan 1 Achieved. Annual audit plan prepared approved by Audit Committee

Assess the risks as identi ed in the risk register

Updated risks register

10 Achieved. All planned audits were conducted during the nancial year and the risk register updated accordingly

Respond to the Auditor General (AG)’s management letter

Response to the Auditor General’s ndings

1 Auditor General’s recommendations implemented

INTERNAL AUDIT

FINANCIAL CONTENTS


76 to108,


REPORT OF THE AUDIT COMMITTEE Report of the Audit Committee required by Treasury Regulations 27.1.7 and 27.1.10 (b) and (c) in terms of the Public Finance Management Act 1 of 1999, as amended.

1. Overview

We are pleased to present our report for the nancial year ended 31 March 2012.

1.1 Audit Committee members and attendance

The Audit Committee consists of the members listed hereunder. As per its terms of reference, the committee is required to meet at least 2 times a year. During the year under review, 4 meetings were held.

Member Period Meetings Attended

P. Bersiks 1 April 2011 - 31 March 2012 4

E. Blom 1 April 2011 - 31 March 2012 2

R. Paola 1 April 2011 - 31 March 2012 3

K. Rana 1 April 2011 - 31 March 2012 3

M. Ntumba 1 April 2011 - 31 March 2012 3

1.2 Audit Committee’s Responsibility

The Audit Committee is a committee of the Board and has discharged its responsibilities accordingly in terms of section 51 (1) a (ii) of the PFMA and 27.1.8 of the Treasury Regulations. The Audit Committee adopted a formal terms of reference, its audit committee charter, and has regulated its affairs in compliance with the charter and has discharged its responsibilities contained therein.

1.2.1 Effectiveness of internal control

During the year various reports of the Internal Auditors as well as the Audit Report on the Annual Financial Statements and Management Letter of the Auditor General indicated that the system of internal control has shortcomings. The Audit Committee has noted these and based on the outcome of such reviews and the information provided by Management, the Audit Committee is of the opinion that the internal controls of the Regulator operated effectively throughout the year under review.

The Audit Committee is also of the view that progress has been made with respect to the control environment, especially in view of the fact that the Regulator has achieved its second successive unquali ed audit report.


1.2.2 Risk management and governance

A risk management framework and policy has been adopted and approved by the Board.

A process of enterprise wide risk management was implemented by the Regulator wherein risk assessments are conducted and updated on an annual basis by the Internal Audit function at both senior management and Board level.

During the year the Regulator adopted and approved various policies and procedures to strengthen the control environment.

1.2.3 Monthly and quarterly performance information

The Audit Committee is satis ed with the content and quality of monthly and quarterly reports prepared and issued by the Regulator during the year under review.

1.2.4 Internal audit

The Audit Committee reviewed the activities of the internal audit function and has concluded the following:

• the function is effective and that there were no unjusti ed restrictions or limitations;• the internal audit reports were reviewed at audit committee meetings, including its annual work

programme, co-ordination with the external auditors, the reports of signi cant investigations and the responses of management to issues raised therein.

2. Evaluation of Annual Financial Statements

The Audit Committee has:

• reviewed and discussed with the Auditor-General and the Accounting Authority the audited annual nancial statements to be included in the Annual Report;

• reviewed the Auditor-General’s audit report, the management letter and management responses thereto; and

• reviewed the signi cant adjustments resulting from the audit.

The Audit Committee concurs and accepts the conclusions of the Auditor-General on the annual nancial statements and is of the opinion that the audited nancial statements be accepted and read together with the report of the Auditor-General and the Accounting Authorities Report. The Audit Committee agrees that the adoption of the going concern premise is appropriate in preparing the annual nancial statements.

On behalf of the audit committee

Peter Bersiks

Chairman Audit Committee

On behalf of the audit

Petettttt r Bersiks


REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON SOUTH AFRICAN DIAMOND AND PRECIOUS METALS REGULATOR

REPORT ON THE FINANCIAL STATEMENT S

Introduction

1. I have audited the nancial statements of the South African Diamond and Precious Metals Regulator set out on pages 76 to 108, which comprise the statement of nancial position as at 31 March 2012, the statement of nancial performance, statement of changes in net assets and the cash ow statement for the year then ended, and the notes, comprising a summary of signi cant accounting policies and other explanatory information

Accounting authority’s responsibility for the nancial statements

2. The accounting authority is responsible for the preparation and fair presentation of these nancial statements in accordance with South African Statements of Generally Recognised Accounting Practice (SA Statements of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA), and for such internal control as the accounting authority determines is necessary to enable the preparation of nancial statements that are free from material misstatement, whether due to fraud or error.

Auditor-General’s responsibility

3. My responsibility is to express an opinion on these nancial statements based on my audit. I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2001) (PAA), the General Notice issued in Government Gazette 33872 of 15 December 2010 and International Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the nancial statements.

5. I believe that the audit evidence I have obtained is suf cient and appropriate to provide a basis for my audit opinion.


Opinion

6. In my opinion, the nancial statements present fairly, in all material respects, the nancial position of the South African Diamond and Precious Metals Regulator as at 31 March 2012 and its nancial performance and cash ows for the year then ended in accordance with South African Statements of Generally Recognised Accounting Practice (SA Statements of GRAP) and the requirements of the PFMA .

Emphasis of matters

7. I draw attention to the matters below. My opinion is not modi ed in respect of these matters

Restatement of corresponding gures

8. As disclosed in note 24 of the nancial statements, the corresponding gures for 31 March 2011 have been restated as a result of errors discovered during 31 March 2012 in the nancial statements of the South African Diamond and Precious Metals Regulator at, and for the year ended, 31 March 2011.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMEN TS

9. In accordance with the PAA and the General Notice 1111 of 2010 issued in Government Gazette 33872 of 15 December 2010, I report the following ndings relevant to performance against predetermined objectives, compliance with laws and regulations and internal control, but not for the purpose of expressing an opinion.

Predetermined objectives

10. I performed procedures to obtain evidence about the usefulness and reliability of the information in the annual performance report as set out on pages 20 to 67 of the annual report.

11. The reported performance against predetermined objectives was evaluated against the overall criteria of usefulness and reliability. The usefulness of information in the annual performance report relates to whether it is presented in accordance with the National Treasury annual reporting principles and whether the reported performance is consistent with the planned objectives. The usefulness of information further relates to whether indicators and targets are measurable (i.e. well de ned, veri able, speci c, measurable and time bound) and relevant as required by the National Treasury Framework for managing programme performance information.

12. The reliability of the information in respect of the selected objectives is assessed to determine whether it adequately re ects the facts (i.e. whether it is valid, accurate and complete).

13. There were no material ndings on the annual performance report concerning the usefulness and reliability of the information.


Additional matter

14. Although no material ndings concerning the usefulness and reliability of the performance information were identi ed in the performance information report, we draw attention to the following matter below. This matter does not have an impact on the predetermined objectives audit ndings reported above

Achievement of planned targets

15. Of the total number of planned targets, only 78% were achieved during the year under review. This represents 22 % of total planned targets that were not achieved during the year under review. This was mainly due to the fact that indicators and targets were not suitably developed during the strategic planning process.

Compliance with laws and regulations

16. I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding nancial matters, nancial management and other related matters. I did not identify any instances of material non-compliance with speci c matters in key applicable laws and regulations as set out in the General Notice issued in terms of the PAA.

Internal control

17. I considered internal control relevant to my audit of the nancial statements, annual performance report and compliance with laws and regulations. I did not identify any de ciencies in internal control which we considered suf ciently signi cant for inclusion in this report.

Pretoria

31 July 2012






































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ISBN 978-0-621-40793-8 • RP 107/2012

Documents

SOUTH AFRICAN DIAMOND AND PRECIOUS METALS REGULATOR … REGULATOR ANNUAL REPORT … · 4 SOUTH AFRICAN DIAMOND AND PRECIOUS METALS REGULATOR Almost ¿ ve years have already passed