The missing step to the downstream diamond dream
Mbongeni Mguni | Wednesday April 26, 2023 15:29
“I was in Paris, looking at Louis Vuitton’s holding company with its leader.
“That company exceeds De Beers by 100 and it exceeds Anglo America five times, in terms of size. It’s huge.
“I was looking at the Sewelo diamond which I think is the second biggest rough diamond ever mined and they have bought it.
“They bought it for a bargain and they told me that after they do this and that to it, the value will be 30 times more.
“This is what we want,” President Mokgweetsi Masisi said recently.
Sewelo, the giant 1,758-carat diamond found by Lucara Diamond at its Karowe Mine in 2019, is expected to fetch tens of millions of dollars when finally sold together with smaller diamonds shaved from the original rock.
In fact, figures made available to Mmegi this week underline the significant accumulation of value, the further down the diamond pipeline one goes. According to an infographic developed by Tacy’s, in 2021, values in the pipeline moved from $14 billion for rough diamond producers, to about $21 billion for the cutting and polishing firms and nearly $86 billion for the retail diamond jewellers.
Masisi’s dreams of extending the country’s reach in the diamond industry from mining and into the value-added downstream world where titans such as Louis Vuitton operate are at the heart of the ongoing negotiations with De Beers.
In the short term, deals with players such as HB Antwerp are expected to give Botswana a taste of the riches further down the pipeline, but in the long term, the country is hoping to establish a presence downstream. One of the key ingredients to achieving that dream is developing local technical and creative capacity for diamond jewellery design and manufacturing, similar to the heavy investment made over the years that has allowed the growth of the upstream (mining) and the midstream (cutting and polishing).
In a world where consumers are increasingly demanding to know the origin of their diamond jewellery, the market has been paying a premium for Botswana’s diamonds, which are emblematic of the “diamonds for development” mantra.
Experts believe the same premiums can be realised with “made in Botswana” diamond jewellery and creative designs.
“Consumers want to know the stories behind what they’re buying, particularly in the case of natural diamonds where the emotional values associated with them will last through a lifetime and on to future generations,” Natural Diamond Council’s CEO, David Kellie, told Mmegi.
“It’s an incredible story (and) it will be exciting to see how the Botswana design style and aesthetic will be expressed through fine jewellery.”
The NDC, an industry group comprising the world’s rough diamond producers, provides global platforms through which hundreds of millions of consumers engage annually with storytelling about natural diamonds and diamond jewellery. Last year, the council’s global ambassador, Golden Globes-nominated actress Lily James visited Botswana bringing attention to the importance of natural diamond mining in Botswana, the positive impact on people, and the innovations in diamond cutting and polishing.
James’ trip to Botswana and the stories that emerged from that, became some of the council’s most engaging content in 2022, demonstrating the significant consumer interest. Kellie said the direction Botswana is pushing towards in the diamond pipeline is not unique.
“In many regions of the world where natural resources have a limited timeline, governments are seeking to use the financial benefits of these natural resources to diversify and build new skill sets and capabilities to ensure prosperity for future generations,” he explained.
“In Botswana’s case, it makes absolute sense to do this by adding value in the diamond value chain, through cutting and polishing, and jewellery manufacturing.
“These skills, plus the advanced use of technology, will then lend themselves to other industries and creative professions.”
Getting the skills in place is no overnight task, but the effort received a boost this week, with revelations that the iconic Haute École de Joaillerie, a prestigious Paris jewellery design training school, has formally submitted a proposal to partner with the Ministry of Education and Skills Development.
The 156-year-old Haute École de Joaillerie is proposing to work with the Oodi College of Applied Arts and Technology to develop a creative jewellery curriculum that would enhance the country’s ability to produce the designers required for the realisation of the downstream dreams. Louis Vuitton sits on the board of the Paris school, bringing more depth to the country’s interface with the luxury giant.
France’s new Ambassador to Botswana and SADC, Olivier Brochenin told Mmegi the proposal had been a few years in the making and was currently being studied by the Botswana government.
“President Masisi went three times to Paris and a lot came out of it,” Brochenin said.
“He visited the Paris Jewellery School, which is Haute École de Joaillerie and thought that he could use the skills and knowledge of this school which is the oldest in the world, based in Paris with extensive knowledge in training.
“A high-level delegation from that school was here in December to assess the situation and meet the diamond sector and a few days ago, the school sent out a whole proposal to the Minister of Education, saying this is what we are ready to commit in terms of training, what sort of programmes and outcomes.
“The Paris school is now waiting for the official answer from the Minister of Education.”
Critics and analysts advise that each step Botswana takes in pursuing greater value in the diamond pipeline, should not only be tempered with an abundance of caution and due diligence but also guided by effective “expectation management”.
The players operating in the $85 billion downstream industry built up their presence over decades and the diamond industry is also notoriously controlled to the point of cartelisation. Louis Vuitton itself is nearly 170 years old, but Brochenin sees opportunities for Botswana to move quickly into the opportunities available downstream.
“I’m sure Botswana will be much faster and quicker because skills can be shared.
“There has already been another actor in the jewellery business who has heard that Botswana is considering scaling up and has visited.
“It’s a corporation called Messika, which is a major French jewel designer.
“Once the word is out, I’m sure a lot will aggregate like a snowball getting bigger and bigger.” The European Union’s head of Political, Press and Information section, Silvia Bopp Hamrouni, told Mmegi that skills were one of the major gaps Botswana needed to plug in its pursuit of opportunities in the diamond value chain.
The pace of Botswana’s move down the pipeline will however be enhanced due to the availability of technology.
“At least 50 years ago you only had these families who had been polishing and cutting diamonds for centuries and had the skills, but today, you don’t need that because it’s all about technology and that’s much easier to learn.
“There’s a very big need to skill the necessary workforce and having this cooperation with the French jewellery school is a very good step.
“Botswana needs to bring in expertise and skill to the young people,” she said.
The winds of change are blowing over the local diamond industry and while the attention is on the country’s negotiations with De Beers, it appears other cogs are falling into place.
Meanwhile, Masisi says as bold as his push is, it is also cautious.
“Are you scared,” he asked journalists at a briefing recently.
“It’s the first time this has happened and we will do it very responsibly.
“I don’t want you to think we are irrational or something.
“We have learnt in outcome terms that we can make much, much more money than we have been making by selling rough.
“We can develop more skills independently, successfully, and we have engaged the market and we know what we are talking about.
“Don’t take this lightly. Don’t be scared of what will happen.
“There may be a little rumbling but you are going to be happy.”