ODC gets working capital from StanChart

BOITSHEPO MAJUBE
Correspondent | Thursday May 23, 2013 00:00

 

ODC managing director, Toby Frears recently told The Monitor Business that a transparent procedure that gave every stakeholder an opportunity to fund ODC was followed and Standard Chartered Bank topped the list.

'We believe that Standard Chartered's experience in the global diamond industry, together with their local expertise, make them an ideal partner for ODC,' he said on the sidelines of ODC's official launch.Frears said government provided the initial start-up capital for ODC through a loan facility. 'The government loan was offered to ODC as part of our start-up capital requirements to ensure the successful establishment of the business,' ODC deputy managing director, Marcus Ter Haar said. He stated that the government loan facility was extended to ODC on a commercial basis and at market related interest rates. He said that ODC would re-pay the loan as per agreement with the Ministry of Finance. 'We look forward to doing business with Standard Chartered in the near future. They are our lender of choice based on the competitive financing they offered our company,' he said. He added that the finance they have secured from Standard Chartered Bank will cover ongoing working capital (diamond purchases) requirements.  'ODC will continually look at optimising its financing requirements to ensure we remain competitive,' Ter Haar said.

ODC is expected to be a new alternative source of Botswana diamonds to the market. It is expected to provide a viable sales channel that will deliver sustainable commercial returns to government and to help in transforming Botswana into a leading rough sourcing destination. This is meant to increase trade and investment in diamond support services and expand opportunities for small and medium sized companies.  ODC auctions are expected to sell diamonds worth up to $400 million (P3.4 billion) a year. The  state-owned company was formed in March 2012 as a key part of Botswana's plans to establish diamond trading and other diversified diamond-related activities in the country. The company evolved from the 2011 agreement between De Beers and the government to make a portion of Debswana's production available for sale locally, independent of the DTC. Under the agreement, government's share of Debswana's production, 10 percent of which was available retroactively from the beginning of 2011, will increase by one percent each year until it reaches 15 percent in 2016. As a result, ODC is entitled this year to auction up to 12 percent of Debswana's targeted 2013 production of 20 million carats.