Botswana may bypass DTC

JOHANNESBURG – Botswana says a planned sales venture with diamond giant De Beers may bypass the group’s Diamond Trading Company operation in London, marking a major departure from De Beers’ decades-old central sales structure.

De Beers is under increasing pressure from southern African governments to create jobs by sorting and valuing diamonds locally and by supplying local polishing outfits direct. De Beers and Botswana, who already share Debswana whose three large kimberlite mines make Botswana the world’s top diamond producer by value, agreed this year to create a local sales venture to promote the small local polishing industry.Officials at De Beers, which is 45 per cent owned by Anglo American, said in an emailed response to Reuters on Tuesday that the details still had to be worked out.But President Festus Mogae told Reuters last week the new venture would bypass De Beers traditional mixing process, in which uncut gems from around the world are mixed by the Diamond Trading Company (DTC) in London to be sold on in batches.Mogae said “DTC Botswana” – to be owned half by Botswana’s government and half by the DTC in London – would take rough diamonds from Botswana and other countries in the region and sell them on in Botswana, without going via London.”The sorting (and valuation) normally would take place in each individual country,” Mogae said in an interview in Gaborone, which already boasts a large De Beers sorting operation whose entire gem output is exported to London.”What would then happen is that the diamonds from the region could then be dealt with here by the Diamond Trading Company instead of being dealt with in London, and it would be possible for sightholders to visit Gaborone and not only London,” Mogae said.De Beers’ selected customers are known as sightholders, and there are currently four in Botswana, out of 25 in southern Africa as a whole, mostly in neighbouring South Africa.De Beers declined to confirm whether the model described by Mogae was one of the options being discussed.”We are in discussions with the Botswana government about how goods could be made available through DTC Botswana to the local industry,” DTC spokeswoman Rosalind Kainyah said.”We are fully supportive of Government’s objectives for developing a sustainable local downstream industry that has the opportunity to compete globally,” Kainyah added.A government official said the handful of local diamond polishing outfits were expanding fast thanks to computer technology and precision laser cutting machinery which allowed them to compete better against large Indian operations benefiting from cheap skilled labour.Pressure on De Beers to promote local polishing has grown since Israeli diamond tycoon Lev Leviev set up Africa’s biggest polishing factory in neighbouring Namibia last year.Botswana’s diamond industry accounts for 35 per cent of gross domestic product and around 85 per cent of exports, according to figures quoted by De Beers Chairman Nicky Oppenheimer at a trade fair in the capital Gaborone on Tuesday.Botswana’s attempts to reduce its almost total dependence on diamonds by ventures into manufacturing and financial services have had little success, increasing its desire to give downstream diamond operations a boost.- Nampa-ReutersDe Beers and Botswana, who already share Debswana whose three large kimberlite mines make Botswana the world’s top diamond producer by value, agreed this year to create a local sales venture to promote the small local polishing industry.Officials at De Beers, which is 45 per cent owned by Anglo American, said in an emailed response to Reuters on Tuesday that the details still had to be worked out.But President Festus Mogae told Reuters last week the new venture would bypass De Beers traditional mixing process, in which uncut gems from around the world are mixed by the Diamond Trading Company (DTC) in London to be sold on in batches.Mogae said “DTC Botswana” – to be owned half by Botswana’s government and half by the DTC in London – would take rough diamonds from Botswana and other countries in the region and sell them on in Botswana, without going via London.”The sorting (and valuation) normally would take place in each individual country,” Mogae said in an interview in Gaborone, which already boasts a large De Beers sorting operation whose entire gem output is exported to London.”What would then happen is that the diamonds from the region could then be dealt with here by the Diamond Trading Company instead of being dealt with in London, and it would be possible for sightholders to visit Gaborone and not only London,” Mogae said.De Beers’ selected customers are known as sightholders, and there are currently four in Botswana, out of 25 in southern Africa as a whole, mostly in neighbouring South Africa.De Beers declined to confirm whether the model described by Mogae was one of the options being discussed.”We are in discussions with the Botswana government about how goods could be made available through DTC Botswana to the local industry,” DTC spokeswoman Rosalind Kainyah said.”We are fully supportive of Government’s objectives for developing a sustainable local downstream industry that has the opportunity to compete globally,” Kainyah added.A government official said the handful of local diamond polishing outfits were expanding fast thanks to computer technology and precision laser cutting machinery which allowed them to compete better against large Indian operations benefiting from cheap skilled labour.Pressure on De Beers to promote local polishing has grown since Israeli diamond tycoon Lev Leviev set up Africa’s biggest polishing factory in neighbouring Namibia last year.Botswana’s diamond industry accounts for 35 per cent of gross domestic product and around 85 per cent of exports, according to figures quoted by De Beers Chairman Nicky Oppenheimer at a trade fair in the capital Gaborone on Tuesday.Botswana’s attempts to reduce its almost total dependence on diamonds by ventures into manufacturing and financial services have had little success, increasing its desire to give downstream diamond operations a boost. – Nampa-Reuters