Government is amending the law to give the state the first option to buy â€˜unusualâ€™ diamond finds such as the historic Lesedi La Rona discovered at Karowe Mine two years ago.
A recently gazetted draft Bill for amending the Precious and Semi-Precious Stones Act contains a new clause that compels any producer that comes into possession of an unusual rough or uncut diamond to notify the minister within 30 days following which government shall have the right of first refusal to the stone.
“The price to be paid by government for a rough or uncut precious stone offered for sale by the producer shall be agreed between the parties in accordance with the current market price of the rough or uncut precious stone,” read the Bill.
In November 2015, the Karowe Mine in Boteti owned by Canadian miner Lucara Diamond, discovered the 1,109 carats Lesedi La Rona, which is still to be sold after an attempt to auction it failed to attract a price the producer expected.
The Lesedi La Rona is now however in danger of losing its second-ever largest diamond found status, as the stone is now likely to be cut into pieces before it is resold.
Apart from Lesedi La Rona, Lucara also discovered an 813-carat diamond, called The Constellation, which it sold for a record-breaking $63.1 million (P640 million) last year.
Chief minerals officer in the Ministry of Mineral Resources, Green Technology and Energy Security, Moses Tshetlhane told BusinessWeek that amendment of the law was motivated by recovery of one or two unusually big size diamonds in the category of the Lesedi La Rona in the past by local diamond mines.
“These outliers carry special features and any producer would celebrate such or even have them in museums as national treasures. So it is not unusual for governments to have options in such unusual diamonds,” he said.
According to Tshetlhane, every diamond mine has a production profile which when drilled down further into details yields a production fingerprint. In that profile or fingerprint, he said, an unusual diamond would have certain characteristics in terms of size (carat), quality (clarity) and colour.
Some of the amendments to the Act include stiffer penalties for illegal trade of diamonds, as well as false declarations of discovery of precious stones. The amended law attracts a fine of as much as P500,000 and P2 million for a repeat offender to a person who imports or exports a rough or uncut diamond without inspection from an authorised person.
Producers that also make false declaration about the place they would have discovered a precious stone should also be liable to penalties prescribed by law for a crime of perjury, and all rights acquired by them in consequence of any such declaration shall lapse.
“Some of the key changes to the Act are to remove trade barriers and increase penalties to deter any potential illegal trade as well as improve facilitation in the sorting, valuing, aggregation and selling of rough diamonds. The Precious and Semi-Precious Stones Act is being amended to ensure that it stays relevant and applicable to the prevailing and ever changing environment in the diamond industry,” added Tshetlhane.
The government is also amending the Diamond Cutting Act in a bid to ensure the law stays relevant as industry continues to evolve, particularly in recognition of the fact that Botswana seeks to be a world-class diamond centre.
Amongst some of the changes include amendments to the licensing requirements allowing 18-year-olds to be legible compared to the initial 21-year-old criteria.
The changes also remove the requirement of a nominee of the applicant from holding a diamond cutters licence on behalf of the company.
“Companies have raised concerns regarding the current practice of issuing a licence to a nominee of a company as it creates an administrative burden for the Ministry when companies are required to apply for an amendment of the licence whenever a nominee leaves a company.” Tshetlhane said.
Penalties for contravening provisions of the Diamond Cutting Act have also been revised upwards to match the magnitude of the offences including indexing the fines to the value of the diamonds.
Some of the penalties have been increased from P500 to P500,000 while others have been reviewed upwards from P2,000 to P2 million.