Towards A Regional Diamond Centre

| Monday August 23, 2010 00:00

The idea of founding a diamond centre in Botswana was born as early as 2002, but the centre was actually established only in 2008. Akolang Tombale, the architect of the Botswana diamond industry, who was born and raised in Botswana when it was a poor country, before diamond production began, was named coordinator of the diamond hub. After his recent retirement from the post, he was succeeded by Jacob Anthony Rakgomo Thamage, who also serves as head of Botswana's diamond administration and its diamond controller. During a recent trip to Israel IsraeliDiamonds spoke with Thamage and the president's representative in the Government Implementation Coordination Office, Uttum Corea.

Preparing for the FutureWhat part of Botswana's GDP do diamonds (now produced in Botswana by the firm Debswana) represent and what is the relative role of other minerals?

'Before the crisis, the mineral sector (diamonds, copper, nickel and sodium carbonate) accounted for 40 percent of Botswana's GDP. Diamonds represented 90% of this figure (37-38 percent of the GDP). The remaining 60 percent of the GDP is comprised of tourism, customs on imports and financial services.'

What will happen in Botswana in 20 or 30 years' time, when the capacity of rough production in the major mines is exhausted? Is the state prepared for that day? Is there a plan? Are there a budget and a timetable?

'Botswana's diamond centre was established in order to examine the possibilities for the day when there are no more diamonds within the earth here. According to the strategy introduced by the president, the diamond centre will be part of a cluster of six hubs, along with the transport, agricultural, health, education and innovation hubs, being established with the aim of creating employment and promoting economic growth in Botswana.

The country's diamond hub will be based on four key features: a centre of rough diamond trade (to sell the rough produced in Botswana through several independent companies, in addition to rough imported from other countries) and polished diamond trade, a cutting centre, a jewellery manufacturing centre and a centre for retail and diamond ancillary business, such as insurance, bank security (two years ago, for example, there were no banks in Botswana that were involved in financing the diamond industry, and this year three banks in the country - two local and a branch of ABN Amro Bank - are active in this field). The development budget has yet to be finalised; this, along with the timetable, will be determined by the end of the year.'How many factories will the diamond centre include?

'There are currently 16 diamond factories operating in Botswana. Two are partnerships with local firms and 14 are foreign-owned. One of the current issues under discussion is how many more factories we want in the centre. The talks are focusing on the question of how to add factories in a way that will benefit the local population most.'

Does the beneficiation plan include partnership with local residents, as customary in South Africa?

'We do not plan to enact legislation that requires partnerships with foreign parties. We aspire to partnerships founded on a genuine commercial basis, not forced unions. We have only one demand - excellence.'

How much rough does Debswana supply to the diamond factories in the country?

'We have an agreement with De Beers for supply of up to 550 million dollars to the local factories. The agreement will expire at the end of the year. I have no idea what will happen after January 1, 2011 and I wouldn't like to speculate.'

Are there any local diamantaires in Botswana, in addition to the employees of the mines and polishing plants?

'One of our plans is to develop the skills of the citizens of Botswana, so that they not only know how to sit at a table and polish diamonds but also understand the market and how they can become diamantaires.'

Regional CentreWhat are the plans for developing diamond trade? What is the status of the plan to set up a diamond exchange in Botswana? What will it include?

'The local trade is very limited at present, as the Sightholders are not allowed to trade among themselves. The commercial activity that we plan to develop in the future will focus mainly on polished. One of the measures to develop trade is to set up an exchange, which will serve as a physical infrastructure for rough and polished trade, but this subject has not been finalized yet. Establishment of an exchange requires discussions with the local diamond industry, as the exchange would have to be managed by the industry and not the government. Like the entire diamond centre, the exchange is intended to be a regional entity, serving all those involved in the diamond industry in countries throughout the region. Regarding the exchange, like the other issues, we believe we will have plans and a budget by the end of the year.'

In other words, the diamond centre that you are planning is meant to be more than the diamond centre of Botswana?'Precisely. We are talking about a diamond centre that is not intended for Botswana alone, but for all the countries in the region: Angola, South Africa, Congo and even Swaziland, where a small diamond deposit was recently discovered. We will manufacture and supply these countries with our mining technology, know-how, expertise and training.'

What about other aspects of development?'We expect to find new mines. In addition to De Beers, two other companies are involved in diamond exploration in Botswana: African Diamonds and Firestone Diamonds, and they are expected to begin producing rough within the next two years. We anticipate 1.5 million carats of better quality than 'Indian goods,' in the area of 52-80 dollars per carat.

Alongside development of the diamond mining and manufacturing sectors, we are also interested in developing the production and trade of diamond jewellery. Our consumer target consists of the small group of wealthy tourists to this country. We are already focusing our efforts on attracting low volume/high value tourism, as this will enable us to protect our environment.'Is the new sorting plant that De Beers built in Gaborone already fulfilling its purpose? Is the aggregation already working? In what manner?

 'The aggregation - which is actually a London mix that doesn't occur in London anymore, but has been moved to Gaborone - has been delayed because of the global economic crisis, but it will begin before the end of the current year.'

According to the agreement between De Beers and the Botswana government, if De Beers begins marketing gem-quality synthetic diamonds, they will be marketed in 25 percent-75 percent partnership with Botswana. What do you know about these plans?

'Wow. Where did you get that question? You must have read the agreement. We do not wish to comment on this. At the moment we have rough diamonds and we have no comment on synthetic diamonds.'

What is happening at the Diamond Technology Park that Brian Gutkin's Safdico and Steinmetz built with a 50-million-dollar investment?

'The park is occupied by two factories, two local banks, the ABN Amro branch, Brinks and Malca Amit courier services and offices of the brokers Hennig and Bonas. Diarough operates there and the GIA is already issuing certificates and teaching courses there. We opened an office of the Diamond Administration there, with functions similar to Israel's Diamond Control Office.

The office issues Kimberley certificates and licenses for exporting rough. We handle matters that involve the diamond factories such as employment, licensing and the like.'

How much does the diamond industry contribute to the national income?

'The income comes from the mining companies, which pay a royalty (10 percent of their gross income), profit tax (25 percent on sales of local rough or export) and dividends on the government's share (50 percent) in Debswana.

During the global economic crisis there was a notable drop in Debswana's production. While 33 million carats were produced at a value of 3.2 billion dollars prior to the crisis, this figure declined to approximately 21 million carats at a value of 2 billion dollars during the crisis.'

What have you gained from your visit to Israel?

'We wanted to introduce ourselves to the diamond industry, to meet with the industry leaders and begin building a relationship. We learned that an industry in crisis has to focus. When the crisis broke out, the Israeli industry remained focused.

People didn't panic; they understood that it was a short-term crisis and they looked at the long-term picture. That's what we learned here.'-(Israelidiamonds)