New De Beers’ CEO plans downstream partnership with Botswana
Mbongeni Mguni | Tuesday May 23, 2023 12:45
Sharing his list of priorities as the new CEO in his first meeting with local media recently, Al Cook spoke about a plan he said Batswana would “be hearing a lot more about”.
“It is about how we expand along the value chain towards retail, towards the point where someone puts a beautiful piece of jewellery on their finger or bracelet or necklace,” he said.
“How do we make sure that we build along the value chain?
“De Beers is a brand a name that has been synonymous with diamonds for 135 years, but arguably, it’s a brand that we have not delivered on the potential and I believe there’s also potential in the brand of Botswana.
“(It is) one of the most extraordinary countries in the world that people need to understand more about and that we can associate more with the diamonds that come from there.”
According to Cook: “Together, that creates a retail opportunity for De Beers and for Botswana. “That’s the fourth element of the strategy that we are thinking up.
“It’s early days and we will develop that as we go forward.”
Taking the De Beers/Government of Botswana partnership into the diamond industry’s downstream not only echoes the national priorities of value chain development and a knowledge economy, but points to an outcome pursued by President Mokgweetsi Masisi in his recent remarks about the partnership with the diamond giant.
The two parties, whose 54-year old partnership has anchored the country’s development and created the global diamond industry’s single most valuable covenant, are hoping to finalise talks for new mining and marketing arrangements by the end of next month.
One area Masisi has been pursuing, according to statements he made as far back as 2018 when negotiations began, is for Botswana to secure greater access to the values in the diamond industry’s pipeline, beyond simply being a miner of the precious stones.
“The whole value proposition of beneficiation of diamonds revolves around jobs, the diversification of the economy,” Masisi told Bloomberg in an interview in May 2018.
“Why take them far away?
“So the very things that cause them to be processed elsewhere, we want to get to the underlying reasons for that, the attractions and bring them to Gaborone.”
How values in the diamond industry grow the further down the pipeline one travels is evident in recent data showing that in 2021, the global diamond jewellery industry generated values of about $85 billion, compared to the $15 billion shared by the various countries that actually dig for the shiny stones.
“Diamond jewellery” is a term covering ornaments whose central value is the diamond, but which typically involve other minerals like gold such in the making of the bands of a ring as well as rubies sitting next to the diamonds in the centrepiece.
However, industry experts agree that the $85 billion in values is generally the outcome of progressively adding value from a rough stone dug up most likely in Botswana, cut and polished and further shaped most likely in India and designed into jewellery in the United States or Europe.
For 54-years, government’s partnership with De Beers has been in the upstream of the diamond pipeline, the actual mining of the stones. De Beers’ does have a strong retail presence globally through its De Beers Jewellers and Forevermark footprint across the world. Government, as a 15% shareholder in De Beers, is therefore indirectly exposed to the downstream or retail end of the diamond pipeline.
Cook told Mmegi there is room for a more direct partnership in the retail space.
“The first part is to recognise that Botswana, De Beers, we produce a large fraction of the world’s rough diamonds but between us we sell just a small fraction of the polished diamonds,” he said.
“When you look at the global reputation of De Beers, there’s a potential there to expand our retail sales.
“We are well embarked on that process and if you go today, you will find a De Beers’ jewellers store in New York, in London and countless in China and other places around the world.
“But, as De Beers, how can we leverage the incredible presence that the name De Beers has around the world?
“We can come forward and say, ‘look we are the only place where you can buy a diamond engagement ring from the company that actually takes that diamond out of the ground’.
“And we therefore have the ability to select some of the greatest diamonds on earth to be part of the jewellery in a way that no other brand can compete with.
“The second part of that is, if we add Botswana into that; what we can do together that we could not just do as De Beers is where I get really excited.”
For Cook, opportunities to partner in the retail space involve around leveraging the brand positioning of both partners at a time when consumers are particularly sensitive about the ethics and processes of the countries and companies from where goods are sourced.
As more consumers demand that corporates adhere to the highest Environmental, Social and Governance (ESG) standards, the diamond industry has had added pressure as Russia’s stones continue to trade in the global market, despite Western nations sanctioning Moscow for its ongoing with a invasion of the Ukraine.
De Beers, the 135-year-old brand most responsible for creating global demand for diamonds through its story-telling and marketing, sees an ideal retail partner in Botswana, the country most emblematic of the “diamonds for development” campaign that the industry used to crush the existential threat posed by the “blood diamonds” crisis of the early 2000s.
“I believe that the world is moving to a place where people care more about what they buy and where it comes from, whether it’s the food they eat or the wine the drink,” Cook told Mmegi.
“People care more and more about where their beautiful diamond came from and what good it did on the way.
“So my belief is that if we can bring Botswana and De Beers together, that is a really exciting retail proposition for customers around the world.”
A major part of any planned partnership in the diamond downstream between Botswana and De Beers, will be the ability to demonstrate provenance, or proof that the diamond jewellery being sold at a premium because of the Botswana story of “diamonds for development,” was actually sourced from Botswana.
Provenance has also become paramount to distinguishing De Beers’ production in a global market where Russia’s sanctioned products continue to play. The diamond group is ramping up its TRACR technology, the five-year old traceability initiative powered by blockchain and providing the ability to track a stone’s origin from its soils in producer countries like Botswana, to the shop displays in New York.
“With TRACR we have the ability to tell people about where their diamond has come from that we have never really had before,” Cook said.
“So not only can I tell people that this diamond is from Jwaneng, I can tell someone, ‘here’s the good that the diamond did along that journey, here’s the prosperity it brought at every point of its journey’ and tell the story of Botswana in there.”
Cook said his vision for the partnership between De Beers and Botswana is focussed on the next decade and being able to look back and agree as a company and a nation that the arrangements put in place now, are delivering value for all.
All eyes are on the outcome of the ongoing talks and how the long relationship between the two partners will look when the white smoke emerges from the negotiating room.