Preliminary discussions have been held between De Beers and the Botswana government regarding possible De Beers-led trading activity in the country, www.diamonds.net reports. The talks come as the government works to develop its diamond trading hub program in Gaborone.
“I don’t think that the possibility of the government establishing a trading platform is at all a problem for us,” Neo Moroka, De Beers Botswana chief executive officer (CEO) and De Beers resident director, told Rapaport News. “In fact, we are completely supportive of government’s desire to establish a sustainable downstream industry here in Botswana.”
De Beers and the Botswana government, equal partners in the mining company Debswana and its sales unit, the Diamond Trading Company Botswana (DTCB), are about to begin negotiating to renew their marketing arrangement for Debswana production, as the current contract expires at the end of 2010.
Moroka said that the parties are engaged in very early discussions to review a number of options through which De Beers expertise could be used to enhance the diamond trading hub program.
“One of those might possibly be further trading activity, but we need to do more research before we decide whether or not to proceed,” he explained.
Moroka added that if the shareholders determine that trading would maximize the value of the resource, then a volume of goods could be made available for trade in Botswana going forward.
In June, the government gave the green light to Boteti Mining, a joint venture between Lucara Diamond Corp. and African Diamonds, to sell output from its AK6 mine locally via tender or exclusive contract. The introduction of tenders is part of the government's plan to develop trading in the country as it seeks to diversify its economy beyond diamond mining. Currently, rough diamonds can only be sold by DTCB to the 16 manufacturers operating in the country.
Moroka stressed that the company does not intend to sell by tenders, which have been utilized by Rio Tinto and BHP Billiton, the third- and fourth-largest diamond producers. Rather, De Beers will maintain its strategy to maximize the value of its diamonds. In 2008, De Beers started hosting diamond auctions, rather than tenders, for the nonsightholder secondary market through its subsidiary Diamdel.
“As [do] De Beers and the government, we want to maximize the value of every rough diamond that we sell,” Moroka said. “If we are to start further trading activity, we would have to assure ourselves that this would yield the desired effect to maximize value from the rough diamonds.”
Moroka, a former minister of trade and industry who took the reins at De Beers Botswana in February 2010, stressed that De Beers goals are in line with the government.
“I know that one of the government’s objectives is to attract direct foreign investment and De Beers is the biggest investor in the country,” he explained. “So I believe that we are well placed to contribute toward the objectives of the diamond hub.”
Moroka confirmed that De Beers intends to move aggregation from London to Gaborone as soon as possible. He noted that there were a number of outstanding requirements that would need to be in place in order to proceed, such as the correct infrastructure, an appropriate regulatory environment and assured security, all of which would take time to establish.
“We could be ready to move some time early next year,” he said.
De Beers established DTCB in 2006 to sort and value Debswana’s production and make diamonds available for sale in Botswana for local manufacturing.
The government of Botswana owns a 15 percent stake in the De Beers Group, with Anglo American holding 45 percent and the Oppenheimer family’s Central Holdings Group owning 40 percent.
