Botswana Aims to Become Leading Diamond Hub as De Beers and Government Sign Deal

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Botswana, in southwestern Africa, is aiming to become the world's leading hub for rough diamond sales, the cutting and polishing of rough gems, and the manufacture of diamond jewelry. In 2010-11, Botswana regained the world's top position for rough diamond production from Russia.

For further information see August 5, 2011 - Botswana Overtakes Russia as Highest-Value Diamond Producer.

Supporting this strategy is a 10-year contract signed with De Beers (Johannesburg, South Africa) for sorting, vaulting and selling diamonds produced by Debswana (Gaborone, Botswana), which is a 50:50 joint venture between De Beers and the government of Botswana. Mining group Anglo American plc (PINK:AAUKY) (London, England) holds 45% of De Beers; South Africa's Oppenheimer family holds 40%, and the Botswana government owns 15%.

Debswana accounts for about 70% of De Beers' total annual production, which this year is forecast to be 35 million to 36 million carats, with sales of 38 million carats. The CEO of the company's Diamond Trading Company (DTC), Varda Shine, expects global demand growth for rough diamonds to reach a record high this year, driven by an exceptionally strong performance (8% to 9% growth) from its key U.S. market and robust demand from China and India, driven by the rising spending power of the younger populations in these countries.

De Beers will relocate its complete London-based diamond sales operation to Gaborone, the capital of Botswana, by the end of 2013, and a good number of DTC staff will be based in Gaborone. The international 'sightholders,' who have traditionally flown into London 10 times per year to view and buy diamonds offered to them, will now fly into Gaborone.

De Beers Chairman Nicky Oppenheimer said at the agreement signing that Botswana had preserved and enhanced a highly successful route to market, focused on maximizing value of the country's natural resource. "De Beers has secured a long-term and uninterrupted access to the largest supply of diamonds in the world. This is a once-in-a-generation opportunity for Botswana and De Beers to shape the future of the diamond industry. Together we will create the world's greatest diamond hub," he said.

Vanda Shine said that diamond prices were likely to continue rising because of constrained supply and the demand drive from China and India. Diamonds have been one of the best commodities this year, with rough diamond prices boosted by a dearth of new mines, low inventories at cutting centers and increasing demand, she said.

For related information see March 10, 2010, article - Fluor Wins EPCM Contract at Botswana's Jwaneng Diamond Mine.

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