Botswana and India in diamond trade deal-report

Brian Benza
Staff Writer | Friday January 8, 2010 00:00

Although government and Debswana officials remain tight-lipped over the latest development, Indian website LiveMint said an agreement was expected to be inked during the current visit of India's vice-president Hamid Ansari to Botswana which starts Saturday (tomorrow). Ansari, who is also visiting Malawi and Zambia, is expected in the country tomorrow and will sign several bilateral agreements at the office of the president before he jets out on Monday.

LiveMint, who have a reporter onboard the Vice president's special flight, said India is to sign an agreement with Botswana to buy rough diamonds for its cutting and polishing industry instead of using De Beers as a middleman.

The imminent signing of the agreement is said to be following the conclusion of a framework agreement while the actual sourcing of uncut diamonds is expected to take place after two years.

'Botswana is the world's first or second largest diamond producer. This is of direct interest to us, as we have a large and prosperous diamond cutting industry in Gujarat,' Ansari told reporters.Presently, Botswana and De Beers have a standing agreement which compels all the rough diamonds produced in the country to be sold through DTC.

However, the contract with De Beers comes to an end in December this year and government has in the past year openly expressed its intention to open a parallel selling and marketing system of diamonds.

In a bid to become a world diamond trading centre, Botswana is trying to break the DTC monopoly and create an alternative diamond market system, which analysts believe will give better value to Botswana diamonds.

However, Permanent Secretary in the Ministry of Minerals, Energy and Water Resources Gabaake Gabaake expressed ignorance over the signing of the agreement saying, 'it is highly unlikely there is something like that'.

'I am still on vacation, I have not been in the office since mid-December but I would know if something like that is happening.

'We have a standing agreement with DTC which ends in December this year and we are supposed to start renegotiating that contract in a few months'time,' said Gabaake.

Debswana Public relations and communication manager Esther Kanaimba-Senai referred all questions to government and De Beers saying as Debswana, they are just a producer and only sell to customers agreed upon by their principals. Public relations officer in the Ministry of Minerals, Energy and Water Resources Doreen   Motshegwa also said  Botswana and India will not be signing any agreement regarding Diamond sales.

India is the largest importer of uncut diamonds, but most of them have been routed through the trading centres of Antwerp.

Ansari told LiveMint that there is a long-standing government policy 'to try to get diamonds directly from the source'.

'As more and more countries are discovering, direct dealing between seller and buyer is better than the indirect dealing through monopoly organisations in London,' said Ansari without naming De Beers directly.

De Beers, the world's largest diamond producing and trading company, controls the mining and distribution of diamonds from Botswana, which accounts for 50 percent of its global trade.

If India and Botswana pen down the deal, it would give impetus to  Botswana's ambitious plans to  turn itself into a diamond trading centre by opening an independent marketing channel .

Analysts believe this would give Botswana an independent 'window' on the market and enable a better assessment of market conditions, and perhaps provide an opportunity to develop as a centre for the trading of diamonds from other countries.

Government and De Beers have been haggling for the past few years over the local marketing and beneficiation of diamonds mined in Botswana. As part of its concession to Government, De Beers agreed to move the entire aggregation of its entire international diamond production to Gaborone.