DTP, govt in diamond trade talks

MBONGENI MGUNI
Staff Writer | Friday October 5, 2012 00:00

 

Business Week has learnt that negotiations between the Diamond Technology Park (DTP) and government, via its Okavango Diamond Company, are ongoing for auctions of diamonds from the new bourse.Okavango is the fledgling state-owned entity which will market and sell between 10 and 15 percent of Debswana's run of mine production, under a 10-year deal signed between government and De Beers last September.

Prior to the deal, all Debswana production was marketed through De Beers' Diamond Trading Company system, but from the second half of 2013, Okavango will independently auction the portion of production set aside for government.

'We are in discussions with government, but it's too early to say they will operate from here because we have only just finished the building,' DTP CEO, Rutang Moses told Business Week.'The Okavango Diamond Company has only just been established, but we are in conversation with government and we expect them to tender their goods on our trading platform. 'We are also talking to different companies in terms of using the tender platform. Any producer can come to the bourse, invite whoever needs to come for that and hold their tender process here.'

As part of unlocking the full value of diamonds, government in 2008 allowed the first diamond producer outside the Debswana/Diamond Trading Company system to independently market its diamonds, followed by a second in 2010.

The value of stones from both Firestone and Lucara, the two local producers licensed to hold open auctions, is however dwarfed by Okavango's potential which could be between $300 million to $350 million (P2.3 to P2.7 billion) in rough diamonds annually.

The bourse will also be open to producers and players from outside Botswana.Okavango's new managing director, Toby Frears, recently said arranging a building to conduct tenders was part of the ramp up of activities towards the June 2013 target for diamond tenders.

'Over the coming months, we will be focusing on developing and implementing the launch plan, putting together a world class team including the appointment of a deputy MD, developing the company strategy and operating plan, defining sales model and identifying and equipping suitable premises for the start of trading activities,' he said.

The diamond bourse will act as a trade exchange with participating producers likely paying fees or subscriptions, while reaping the benefits of a hi-tech design benchmarked from bourses in India, Antwerp and South Africa.

Sweetening the deal for Okavango will be the presence of consultants, brokers and other key diamond entities already at the DTP, including the Gemmological Institute of America, the world's leading certifier of diamond grades and qualities.

The DTP also boasts of a top security system, including police, local and international banks, courier services and machinery suppliers. Observers also expect the close relationship between the DTP and top government to sway the deal, a symbiosis seen in the fact that government's diamond agency, the Diamond Hub, is housed at the DTP.

Located along Airport Road, the Diamond Technology Park is a hi-tech office district housing diamond activities. It is a private venture owned by Safdico, a local cutting and polishing company with offices and facilities in Gaborone, Antwerp, Geneva, Johannesburg, London, New York, Tel Aviv and Mauritius.