ODC April auction fetches P620m

Brian Benza | Friday April 25, 2014 12:40

 

ODC sells diamonds via 10 online spot auctions per year, having launched commercial sales in October. According to figures made available by ODC this week, the April sale, the third of the year, sold a total 355,688.71 carats for a sale value of  $70,4 million (P620 million).

The goods are available for viewing in Gaborone for two weeks before the auction closes, and bidding is conducted online via the company’s website.  Buyers from Botswana and all over the world can participate in ODC’s sales and access Botswana diamonds at market-determined prices. On average Okavango sells about 250,000 carats of rough diamonds per auction with projected annual sales of about $400 million (P3.5 billion).

Last week, ODC announced that it has secured a $100 million (P880 million) loan from Standard Chartered Bank Botswana to fund diamond purchases and other operational expenses. In 2012, government provided the initial P540 million start-up capital for ODC through a loan facility from the Public Debt Service Fund (PDSF).

The PDSF however could not adequately cover ODC’s funding requirements largely due to foreign exchange fluctuations.

Government has guaranteed the Standard Chartered loan for a period of 10 years after which it is expected that the company would have accrued enough capital to procure goods without a need to utilise the loan facility.

ODC buys partially sorted diamonds from De Beers Global Sightholder Sales (DGSS) and then sorts the goods into its own sales assortment before inviting its customers to view and purchase the stones through an auction process.

According to a 2011 agreement, ODC sells government’s share of Debswana’s production, 10 percent of which was available retrospectively from the beginning of 2011. The share increases by one percent each year until it reaches 15 percent in 2016.

ODC was established as a key part of Botswana’s plans to establish diamond trading and other diversified diamond-related activities in the country. ODC is this year planning to introduce fixed-term supply contracts in 2014 to become a direct competitor to De Beers.

Currently, the fledgling state-owned diamond company only sells through auctions.