DTC relocation - a golden era for national development

Correspondent | Friday December 13, 2013 17:10

 

The first part of this article is written for the benefit of those who have been pushing me to share a bit of information on what motivated me to embark a diamond beneficiation crusade, and what motivated me to advocate for DTC relocation to Botswana. I will not share much at this point in time. Time will come when I will elaborate more on the matter. Factors that drove me to take the dangerous route of calling for diamond value addition to the economy included amongst others, hate for anything evil and therefore the evil I saw in the running of our diamond industry, patriotism and genuine desire to see good prevailing in Botswana society.

When I called for local diamond beneficiation many did not know what I was talking about. The educated and government administrators thought I was trying to destabilise the country with my 'narrow' thinking. The gluttonous who think with their bellies hated me and wished I could perish. But they also could not understand what I was talking about. When I advocated for the relocation of DTC Aggregation functions to Botswana, many were now certain I was mentally deranged.  But, every fibre in my body knew that was the right thing to do. And In my spirit I knew without an iota of doubt it would happen, because Yahweh had decreed it! Those with deeper insight knew it was God's war! Diamond beneficiation had been ordained from Heaven and could not be stopped by any force on earth.

There was a dark solid cloud covering Botswana because of diamonds. It had to be broken, and it was broken! It was a tough battle! Not for self but for the whole. It was not a battle for national stadium medals, but for Heavenly medals!  It was a battle for Yahweh! Like any battle there were casualties in the process. Jobs were lost and political career prospects destroyed. It was a war for freedom!

The cause for the battle has now been justified. God's plan has been fulfilled as He had willed! DTCI is no longer in London, but in this small laid back diamond blessed African country. The first ever DTCI diamond sales took place on November 11, 2013. To me it was happy birthday, for during that time, and for this purpose I was born! What was seen by many as madness was after all foresight - a gift of God that is not given to everyone. It is a gift for visionaries. Visionaries are often misunderstood by those who cannot see beyond the realm of the physical eye.

They are usually persecuted for doing good and for telling the truth. That is why the slaves of satan killed many Prophets of old and crucified Jesus of Nazareth. That is why they incarcerated Nelson Mandela for 27 years in Roben Island. These are men that had put their heads on the blocks to save them! What an evil world we live in!

DTCI coming to Botswana has been dubbed the biggest transfer of assets from the developed to the developing world.

It has brought with it US$ 6 billion of annual diamond sales from London to Gaborone, and unprecedented economic opportunities for Botswana, which have already begun to swell the national treasury. It was in God's plan that it be so! Unfortunately, many in our governing systems, particularly in Africa, often lack discernment to read the times. They depend solely on the intellect, which is polluted by an education system that trains the mind to follow models, philosophies and concepts developed by people alien to their environments. A system that cripples people from being original thinkers. Any school of thought outside this system, is considered alien and therefore without merit. This is the curse that has held Africans in bondage since colonialism and is the curse eating cancerously at the Botswana of today, hence we are officially classified as one of the least innovative country in the world.  God help us!

 

The diamond beneficiation Impact 

The impact of the diamond beneficiation initiative on the bottom line, in terms of increased cash inflows, Botswana export base, income from employment, industry knowledge etc, has been great within this short period of time. In terms of employment it has contributed to the reduction of the unemployment figures by over 3,200. The occurrence is rapidly increasing, as many more diamond companies and other related industries continue to set up in Botswana. Self employment is on the rise, as citizen's venture in this new industry, and industries associated with it. Pre diamond beneficiation, these people were supposed to be confined to poverty, helplessness, low self esteem, prostitution, homosexuality and ultimately HIV Aids and death. But, thank God they are now earning descent living and taking care of their families. Was this such a difficult thing to see in the past wasted years?   

What does DTC relocation mean?

It is estimated that 40 percent of Botswana citizens live below the poverty datum line. That is very scary and immoral.  In fact it is a sin that such a wealthy country with only two million people should have so many poor people. This state of affairs can be traced back to the lost opportunities of many years, associated with the non beneficiation of our diamonds, combined with the current wave of greed and corruption the country is infected with.  With the diamond beneficiation initiative we should begin to see multiple benefits to all citizens. We should be able to see every sector of the economy positively impacted by the growth of the diamond industry. This is a big development that needs wisdom, knowledge and national pride to handle. It is an initiative that needs to be driven by men and women of vision (Genesis 41: 25-39). Handled in this way, the initiative should herald the end of poverty in Botswana within the next seven years.

 

Driving and restraining forces

But will Botswana be able to handle this massive heavenly windfall? This is the question many are asking. Will it be able to create a full grown diamond driven economy? There are a number of restraining forces that may work against the full intentions of the beneficiation process. But there also are some good driving forces that given maximum attention, should be able to help towards Botswana's achievement of the beneficiation goals.

Amongst major restraining forces are; old fashioned and corrupt government employees, old fashioned De Beers executives, western countries who have lost business to Africa, disgruntled sightholders, public servants whose mindsets are tuned towards  shunning  local creativity and innovation.

The driving forces are amongst others; patriotic hard working civil servants (mainly women in   middle to upper management levels), the media, and the general population, particularly those between the late 20's and late forties, Afrimond and most interestingly the Anglo American managed De Beers.  I discuss these issues in more details in the seminars that Afrimond (with the Diamond Hub support) is currently running in Botswana. The seminars are an initiative meant to inform and educate citizens on the economic opportunities existing in Botswana, as a result of DTCI relocation, and in Africa as a whole. Suffice to say these are the major variables that the Khama government will need to consider in its mind mapping endeavours.

 

Relocation resistance

Recently the local and international media reported on the imminent departure of Varda Shine from De Beers. There have also been reports in the international press on the sleeplessness nights some sightholders had previously given De Beers over the DTC relocation to Botswana. First of all, let me say that from the onset many in Belgium and to a certain extent Israel had opposed diamond beneficiation in Africa. Belgium did not hide its disapproval in this regard. This is because diamonds have for centuries played a significant role in its economic development. It was now losing all that and therefore had reason to resent this paradigm shift. Ramat Gan was equally losing out on the wealth that African diamonds had afforded Israel.   Thus the commotions raised by the sightholders in question are not surprising, given the fact that they mostly came from these traditional centres. Their opposition to DTCI relocation to Botswana is ungrateful and uncaring, particularly considering the benefits they have derived from Botswana's diamonds over many centuries. Belgium will never stop fighting for the centralisation of the world diamond trading in Antwerp, hence what we saw with some of our junior miners tendering their diamonds in Antwerp instead of in Botswana. These are manifestations of the restraining forces as highlighted above.

 

The Varda Shine/Chain Even-Zohar factor

According to newspaper reports Varda Shine's exit from De Beers seems to have been a result of multiple reasons, amongst which are; differences with Anglo American on the pricing of diamonds and the view by Anglo that she belonged to the old De Beers thinking.  Her exit was actually expected, as the signs were clear since the beginning of the year. I personally would not be surprised if indeed the above stated reasons were the cause for her departure. Varda was very close to most sightholders, presumable because of the umbilical cord ties. She had to create a balance between the sightholders interests and those of the shareholders, which given her umbilical cord ties with most of the former, it must have indeed been a difficult task for her.  Varda shine exit has become a topical issue (though not that hot) in the industry. It is led by opinion maker, Chain Even Zohar, an Israeli diamond journalist and Varda's home boy and friend. Zohar has always tended to give excessive support for Varda Shine in his reporting and in all diamond fora that he rapporteured. This time he has done it in a very big way! In the Mmegi newspaper titled 'Diamond captain forced off a sinking boat Part 1&2), Zohar laments the departure of Varda Shine from De Beers, and goes out gun blazing against De Beers Chief Executive Officer, Philippe Mellier, on Varda Shine exit. Apart from Varda's exit, Zohar's gripes with De Beers amongst other things are; Philippe Mellier's drive to maximize shareholders returns, his castigation of renegade sight holders who  had taken De Beers to task for relocating DTCI to Africa ( Botswana), as well as diamond pricing. In my many years of association with the diamond industry I have not heard Zohar express such anti De Beers' sentiments as he is doing now. Why this sharp turn? The answer may perhaps be found in the following industry trends:

 

Diamond pricing

Since the establishment of DTC/CSO De Beers sightholders had benefitted immensely from African diamonds. The DTCI pricing system was such that the sight holders bought Debswana diamonds at below market prices. DTCI bought Debswana diamonds at their own pre- determined prices, which producers and partners like Botswana had no say in its formulation. It was a question of take it or leave it! Under this pricing system DTCI bought Debswana diamonds at what was/is called Standard Selling Value (SSV).

They bought Debswana diamonds at 80 percent of SSV to sell to sight holders at 100 percent (still below market prices,) with sub-stations at BDVC/DTC levels. On the other hand, Diamantaires outside the DTC sightholders fold did not have this priviledge. They bought diamonds at full market prices. Some of the DTC sightholders even had the priviledge of selling (at high premiums), some of their DTCI boxes to these outsiders. It was a land of milk and honey!

As they benefitted so much from this resource, the shareholders, particularly the producers, were not getting maximum returns from their diamond values. The Old De Beers (pre Anglo control) knew best how to manipulate diamond valuations in their favour, as per their standard selling value system and through price transfers. If therefore, shareholders did not get good returns on investments, it had to be others like Botswana, Namibia etc and not De Beers. Botswana was helpless and remained content with what they could have. It had employed the services of a foreign Government Diamond Valuator, who was paid excessively for performing less than his contracted scope, which included advising on international diamond trade.  If the Botswana government had (like Namibia, South Africa, Australia etc, had done), sought the wisdom of its own diamond experts, which it had been training for the past 40 years, it would have received an input that would have helped it reap at the very least 90 percent of the 50 percent that it was entitled to, and not the 'half loaf' that the government was content with. But the government preferred (as it is custom) to seek the wisdom of 'Egypt'. And at whose expense?

Continues next week