AFRICANGLOBE – Gaborone‘s first gem sales bolster the negotiating power of African governments in the natural resource sector.
In a significant early victory in the battle for local beneficiation of natural resources, De Beers held its first diamond sale on 11 November in Gaborone, Botswana, after ending the sales operations of its London-based Diamond Trading Company.
Known as ‘sights,’ these sales held 10 times a year will each bring more than 80 sightholders – authorised buyers – to Botswana to sift through gems in the offices of the Diamond Trading Company of Botswana (DTCB), which underwent a$120m refurbishment and expansion.
Anglo American owns 85% of the De Beers Group, with 15% owned by the government of Botswana.
While Anglo American is in the midst of a round of cost cutting, Varda Shine, the outgoing executive vice-president for global sightholder sales at De Beers, says that “cost was never the real drive” for the move.
The fundamental goal was securing supplies. As part of the deal to bring its sales to Gaborone, De Beers signed a 10-year sales contract with the government in September 2011.
De Beers sells an average of $500-$600m worth of diamonds per sight.
From next year, the DTCB will also incorporate sales from the local cutting and polishing industry – worth a few hundred million dollars per year – into its sights, which Shine says should push annual sales to close to $6bn.
The Botswana operation will employ 170 people, 60 of them Batswana.
There have been rumblings of discontent among sightholders at the distance they will have to travel.
With few direct flights to Gaborone, most will have to travel via Johannesburg.
“The sort of infrastructure needed to fully capitalise on the sort of high-income diamantaires who will be coming for sights does not yet exist in Botswana,” says Roman Grynberg, a research fellow at the Botswana Institute for Development Policy Analysis.
“We probably have at least two decades of supply where Botswana will be one of the world’s biggest suppliers of diamonds,” says Grynberg.
“Diamond beneficiation has been an important policy objective of the government for at least a decade. It is not a stop gap.”
By: Gemma Ware