Kedikilwe on diamonds

| Friday February 22, 2008 00:00

Platforms like this are important to help us realize that the enemy is not within but outside the room like Gareth so aptly observed yesterday. This conference is important for two reasons. Firstly it follows at least three other similar industry gatherings, which occurred last year in India, Antwerp and China. Secondly its theme 'TRIBUTE TO THE PRODUCER' clearly emphasizes the significance of the historic development of secondary diamond industries in producer countries. There is a discernable, yet understandable degree of apprehension on the part of older diamond centers, institutions, associations and manufacturers regarding the changes occurring in the producer countries as it was also amply demonstrated from the comments made yesterday in the opening sessions. It is only prudent and wise to therefore address the perceptions or misperceptions that may exist surrounding the aspirations of producer countries concerning local beneficiation. We as the government of Botswana have taken a considered decision to cautiously migrate downstream and shed the image of being exclusively and predominantly a producer country as we have characterised ourselves in the past within the industry. (Yesterday in some of the presentations, we realized that this is true of a number of industry players who felt the need to spread out across the diamond pipeline).

We believe this is an important step to take towards the maturation and strengthening of the mineral sector and the diversification of the structure of our economy. This is in line with one of our mineral policy objectives for National Development Plan 9 which states that we will seek to create linkages between mining and other sectors of the economy through local value addition. Reports that we are receiving from those factories that have started production confirm that local beneficiation can and will work in that, the labour force is highly trainable and is able to produce fantastic results in a very short space of time; and the application of relevant technologies helps to mitigate the natural disadvantage of high labour and other production costs we have compared to other centres. Most of the current sightholders are zealous and creative in the way that they are carrying out their businesses and thus helping them make an impact very quickly. Furthermore, of the range of goods that our mines produce, and those that will go through DTC Botswana, only a small portion can and will be profitably polished in Botswana hence our target for only half a billion US dollars worth of goods to be supplied to local factories by 2009.

The rest will continue to go where it can yield best value.We remain cognizant of the needs and aspirations of other players in the diamond industry. We note for example, the concerns of the Diamond Manufacturers and Importers Association of America to the Managing Director of the DTC Ms Vadar Shine that were published and debated in the industry press late last year. These perceptions and concerns, understandable as we feel they are, require urgent, dispassionate and serious attention. In Botswana, diamonds are a strategic national resource. It may by now be a cliche that you have heard over and over again, that our economy is heavily dependent on diamonds. This is an irrefutable fact. Diversification both within and away from the mining sector is an urgent and present imperative. Our policies and actions regarding diamonds may often differ from those of other producers for the simple reason that our dependence on diamonds is arguably greater than that of any other country. It is purely within this context that the carefully considered step towards diamond beneficiation has been taken. Last week on Monday, Botswana's Minister of Finance and Development Planning presented the 2008/2009 national budget to Parliament. The Botswana economy grew by 6.2% in real terms in 2006/07. This was strongly driven by the mining sector, which grew by 5.2% during the same period. The budget speech amply underscored the need for Botswana to grow and develop a sustainable economy. Beneficiation of natural resources is clearly one such avenue. After mining diamonds and exporting them rough over the last 35 years, we believe the time has now come to build diamond industry infrastructure that will help to stabilize our economy, create employment and strengthen the financial foundation of the country. We acknowledge the importance of security of supply of rough diamonds to established diamond centers around the world including India, Israel, Belgium and the United States of America.

The survival of the industry in these centers depends on an assured supply of rough. We are sympathetic to this situation and it is far from our intention to kill the industry in other areas.I want to reiterate our position that what we desire is a simple WIN-WIN outcome for all concerned. The amount of diamonds that we will ever polish profitably and sustainably in Botswana is very small and should hardly ever comprise a threat to business in other diamond centers around the world. Our enlightened self-interest challenges us to protect the interests of the diamond industry as a whole.Our primary interest and concern is to maintain stability on the prices of rough, which are the main source of government revenue for us. This depends on the international diamond industry thriving well. The position of the diamond manufacturers must be strengthened by allowing prices of polished to be responsive to the retail prices where greater margins are realized. In that respect, a degree of balance would be attained. Currently we have 16 sightholders that are licensed to cut and polish diamonds in Botswana. None of these are citizens even though subsequently, we would like to see an emergence of citizen diamantaires. They are American, Indian, South African, Belgian and Israeli companies that are already linked to the existing diamond centers. What has changed is simply the geography, the economics still stay the same. Our current target is to polish diamonds of the value of US$ 550 million by 2009. It is difficult to understand why and how this could possibly destabilize any of the existing diamond centers. The diamond industry is truly global. There are some who say a diamond travels at least seven times around the world before it gets sold to the consumer. More than 80% of the world diamonds pass through Antwerp. The same diamonds find their way to India, Israel and about 50% of them end in the American market in different forms of jewellery. We perceive no harm if a little bit of those transactions happen in Southern Africa which would help potentially uplift the lives of poor people there. Various social deprivations abound in many developing countries. These include ills such as unemployment, dire poverty, poor health facilities, poor housing, and inadequate educational facilities etc. These are stark realities which people in the developing world face everyday despite their countries often being richly endowed with natural resources. These deficiencies have led to the precipitation of the UNDP Millennium Development Goals (MDGs). The United Nations Resolutions on MDGs have been widely accepted.

This speech was delivered By Mooketsi W. Jongman,Chief Minerals Officer on behalf of minister Kedikilwe