Government defends DTC Botswana

Brian Benza
Staff Writer | Friday February 15, 2008 00:00

 

Speaking at the Rough Diamond Conference in Israel on Tuesday, the Chief Minerals Officer in the Ministry of Minerals, Energy and Water Resources, Mooketsi Jongman, said  Botswana will only polish stones worth US$550 million a year by 2009, an insignificant amount in the multi-billion dollar industry. Infact, according to a report by Mining Weekly, Jongman said Botswana wants to shed its image of being a predominantly mining country.

'The time has come to build (our) diamond industry,' he said. He said Botswana does not intend to be a threat to other diamond centres as its aim was to polish only a small amount of rough diamonds. 'The current target is to polish $550-million worth by 2009. It is difficult to understand how this could upset the balance in other centres,' he said. Jongman's remarks came against the backdrop of fears by traditional polishers that  the decision by southern African diamond producing countries to venture into cutting and polishing of rough diamonds in line with their beneficiation strategies will significantly affect their operations due to less supplies. Speaking at the same conference which ended on Tuesday, DTC MD Varda Shine confirmed that major diamond polishing centres will see less supply in coming years due to efforts by southern African nations to develop their own polishing centres. 'There will be centres that will see less goods in the future,' Shine told the diamond conference in Tel Aviv. The beneficiation process is a move by southern African countries to benefit from mining as well as polishing activities. This is done by encouraging manufacturers from the major world centres to set up polishing plants in southern Africa, including Botswana and Namibia, transferring technology and skills to these countries and enabling them to reap fuller benefits from their high value commodity.

DTC Botswana, which is set to be officially opened on March 18, is expected to create over 3000 jobs for Batswana while ancillary industries like transport, security and banking services will also benefit. Shine said smaller rough supply is inevitable since the intention is to divert $1, 2-billion of rough diamonds for polishing in southern Africa by 2010. 'This will impact on the amount of rough supply sent to the United States, Belgium and Israel,' she said. However, she added, the impact of this will be mitigated by the fact that it will actually be the US, Israeli and Belgian manufacturers who will be polishing the rough diamonds in southern Africa. DTC, the marketing arm of De Beers, has set up joint ventures in Botswana and Namibia to distribute the rough diamond to be produced locally. Shine said these new companies will be 'a template for how the DTC will work with new producers in the future'.Even if site activities will be eventually moved to the African joint ventures, London's DTC will continue to run the pricing policy and to set prices of rough according to market conditions.At the annual indaba of African mining in Cape Town last week, Minerals, Energy and Water Resources minister Ponatshego Kedikilwe defended efforts to set up a local diamond polishing industry in Botswana, saying the government's beneficiation plan could be an economic stimulus for the country. 'We consider this to be crucial. It's hoped that this will help stimulate economic development,' Kedikilwe said.He added that Botswana, the world's top producer of diamonds by value, wants to cut unemployment by reversing a trend that has seen the major polishing centres for gem based in countries that don't produce diamonds.

The government has agreed with large diamond producers, including industry leader De Beers, to sell gems to local cutters and polishers rather than export rough stones directly to Europe and Asia. Although some producers have criticised beneficiation as not viable, they have  been forced to change their tune in the face of Botswana's determination to pursue the scheme.