Calls grow for alternative diamond marketin

MBONGENI MGUNI
Staff Writer | Friday January 29, 2010 00:00

Currently, the Diamond Trading Company Botswana (DTCB), co-owned by government and De Beers, sorts and values all production Debswana mines. The DTCB also has a sales and marketing function which is responsible for local sales of aggregated diamonds.

With the drop in diamond prices last year and the gemstones' slow recovery this year, more voices are urging government to fast-track the establishment of diamond auctions and tenders, independent of the DTCB. On Wednesday, leading economist, Dr Keith Jefferis, said such a move would give the country more information and control over the price of diamonds.

'The suggestion is that if we had, say, ten percent of diamonds going through an alternative system of auctions and tenders, Botswana would then be able to see what prices these stones are fetching in the market. This would then put us in a stronger position to understand the market.

'The country would also be in a situation to check that what the DTCB is getting for our gemstones, is a reasonable price or earning,' he said.

Jefferis added that: 'At the moment, most of our diamonds go through the DTCB and their pricing is not directly determined by the market, whereas, systems such as auctions and tenders would be market determined.'

At present, the DTCB sells and markets rough diamonds to the 16 cutting and polishing companies licensed by government to carry out cutting and polishing activities. De Beers, the world's largest diamond entity, continuously assesses the gemstones' price, using a variety of instruments at its disposal.

It is hoped the Diamond Hub's new Coordinator, Jacob Thamage, will push ahead with the organisation's plans to foster alternative marketing of local diamonds.

The previous coordinator, Akolang Tombale, was vocal about the need for third party trading as a way of positioning the country as a diamond centre, while simultaneously aiding price discovery.

'Botswana tenders should not work against the De Beers format, but rather complement it. The market will continue to move further away from the 'cartel mentality,' whereby we all need to learn that there is no longer one individual that sets the price benchmark,' Tombale told international media last year.