South Africa: The Real ‘El Dorado’

By March 4, 2019Country Quirks
South Africa El Dorado

For centuries, many excursionists and teams of adventurers traveled to South America in search of a land filled with gold, jewels, and other rare natural commodities. They claimed to be seeking a land called “El Dorado.” Many travelers attempted the journey, but few returned with noteworthy rewards. In hindsight, maybe someone should have told them about South Africa.

About 1 in every 40 South Africans work in the mining sector. In some provinces, mining accounts for a whopping 33 percent of the GDP1. The country’s deep involvement in the precious metals industry has led South Africa to institute regulatory bodies, strict regulations regarding financial reporting, and other practices to ensure prolonged success. So far, South Africa has experienced just that.

In 2014, South Africa claimed responsibility for 68 percent of the world’s exports of platinum, more than four times the market share of second-place Russia (15 percent)2. Equally impressive, South Africa was the most dominant producer of gold for over 30 years, holding the number-one rank until 20063. And if ridiculous amounts of precious metals would not satisfy restless adventurers, South Africa’s diamonds surely would. The largest gem-quality diamond ever discovered (the Cullinan Diamond) was uncovered in Cullinan, South Africa—weighing over 3,000 carats at the time of discovery4.

As one could imagine, this incredible abundance of desirable commodities has catalyzed some less-than-ethical choices. So, the South African government created the South African Diamond and Precious Metals Regulator (SADPMR). This governmental body exists to enforce the Diamond and Precious Metals Acts5. As implied, these legislative pieces regulate, promote, and protect the harvesting of the country’s natural assets. A notable mandate therein states that precious metal “beneficiators” (those who improve and finish precious metals) “must keep proper books of account in accordance with generally accepted accounting practice and must submit such information … annually by not later than 90 days after the end of his or her business’ financial year6.”

Thousands of kilograms of rare metals and stones are produced in South Africa each year. It is noteworthy that even in an industry as sporadic and unpredictable as mining, accounting principles are mandated to maintain relative financial assurance and order. With these principles coupled with the SADPMR, South Africa hopes to maintain its global positioning in the precious metals industry.


Footnotes:

  1. Statistics South Africa. “Mining: winners and losers of 2017.”
  2. Wikipedia. “List of Countries by Platinum Production.”
  3. Wikipedia. “List of Countries by Gold Production.”
  4. Cullinan Diamond. “Cullinan Discovery.”
  5. South African Diamond and Precious Metals Regulator. “Overview.” 2013.
  6. Government Gazette v. 490. “Precious Metals Act.” April 21, 2006.