Mogae adds diamond sparkle to his legacy

05 Jun 2006

SUNDAY STANDARD takes you behind how President Festus Mogae expertly steered negotiations with De Beers, changing the course of the debate over his legacy.

Nicky Oppenheimer and Charles Tibone had already taken their seats at the head table. Adjusting their ties and preening, the two men were ready to shake hands and flash say cheese smiles to the click! click! of press photographers. It was a gorgeous midwinter day, two weeks ago and the diamond industry was finally going home. The official programme called on everyone to gather at the pressroom for a picture opportunity session of Oppenheimer, De Beers Chairman and Tibone, Minerals Energy and Water Affairs minister signing an historic suite of agreements before President Festus Mogae. The atmosphere took that of a particularly fervent gig. The crowd of journalists carrying spiral note books and press photographers winking behind digital cameras grew until they filled up the press briefing room. Men in cuff linked shirts and designer suits dropped full cups of tea in a huff and rushed to the press room. De Beers bosses cut short scheduled interviews with reporters and joined the beeline and staff members handing out neatly packaged press kits added to the hustle and bustle.

As sure as clockwork, Mogae appeared through the door and scanned the sitting arrangement… then “oops!” cried someone from the crowd. The “oops!” was because event managers had forgotten to reserve a seat for the president. Still seated at the head table, Tibone and Oppenheimer appeared somewhat unnerved. A few De Beers’ staff members and reporters managed stage smiles, but most couldn't muster even that. Rather, with tight-set lips and pensive eyes, they scanned the room for a spare chair. Tibone and Oppenheimer, red faced and almost sweating bullets stood up from their chairs and tried to surrender them to the president. The mood at the head table infected almost everyone, and a kind of edginess had settled over the room.

It must take a man with unwavering determination not to let a breach in protocol stand in the way of progress. “You don’t have to be embarrassed. There’s nothing to be embarrassed about.” That was the reassuring opening comment from the president as he brushed aside the lapse and stood almost shoulder to shoulder with the jostling throng of journalist facing the two red faces at the head table. A few jokes from the president later and the room was once again ready to party.
From the day he huddled around the Office of the President conference table with the Botswana negotiating team to draw their bargaining wish list two years ago, throughout the difficult negotiation period, to the day he found himself without a chair inside a packed press room at the Gaborone International Convention Centre, everyone counted on Mogae to help the situation whenever things floundered on a difficult patch.

“It was a tough negotiation”, recalls Gareth Penny, who later took over from Gary Ralfe as head of the De Beers negotiating team. It is no wonder event planners charged with preparations for the signing ceremony, had not planned to the finer details of the grand finale. Negotiations between De Beers and the Botswana government had been so hectic that no one had had the opportunity to catch a breather and dream about popping champagne corks. Head of the Botswana negotiating team, Dr Akolang Tombale recalls how on a number of occasions, members of the De Beers negotiating team had to rush from the negotiating room to the Sir Seretse Khama airport to catch the last plane home. In fact, when the De Beers secretariat staff members started posting invitation letters for the signing ceremony, the negotiating teams were still locked in a meeting somewhere in Lichtenberg, South Africa haggling over the final details of the agreement.

Dr Tombale lifts his eyes to gaze at the ceiling and lets slip a chuckle as he recalls the times they had to call in Mogae’s spine whenever negotiations got mired in a deadlock. And such incidents were many. Of all the tough moments, Tombale remembers most vividly how the negotiations ground to a halt because De Beers would not sit around the table with consultants commissioned by the Botswana team to help them with the negotiations. For sometime both teams were stuck in their positions and the whole process was fast losing altitude, until President Festus Mogae stepped in. “He handled it quite well. In fact he handled it so well that they eventually came around to seeing our point”, recalls Tombale. With a point on the Botswana score card, everyone returned to the negotiation room and took up their seats around the table. The Botswana team would later make numerous trips to the Office of the President for pep talks whenever they seemed to be loosing steam.

Mogae was so determined to use Botswana’s dominant position in the rough supply chain to leverage stealthy take over of bits and pieces of the De Beers operation that while his lieutenants were hunched around the table haggling with De Beers, he went around the world drumming up support for his ambitious plan. At the time the undertaking seemed so vast that most were convinced it would see him out. During a visit to India last year, he did not pass up an opportunity to lobby international diamantires to his cause. A few months later he was in Namibia campaigning that more cutting and polishing should be done in southern Africa where the bulk of gem-quality diamonds are being mined. “We are not doing this in a hostile manner. We think since we are a source of this, it would be funny that we do little in diamonds and cutting,” he said. Speaking at a joint press briefing in Windhoek with his Namibian counterpart Hifikepunye Pohamba, Mogae stated, “Over time, we, the diamond-producing countries in Southern Africa want more value addition done.” His next stop was South Africa where he lobbied parliamentarians to back him push De Beers to bring diamonds from around the world to be “aggregated” in Botswana, an activity that is currently being carried out in London. Addressing the South African Parliament in October, Mogae asked South Africa for its backing in his attempt to pressure De Beers into moving the Diamond Trading Company's "aggregating" (sorting) facilities to Gaborone from London.

“The most important thing was that we were certain of the president’s support and what we eventually got from the negotiation far surpassed what we had expected”, Tombale told the Sunday Standard. Under the agreement, Botswana has extended De Beers’ rights to operate the Jwaneng diamond mine, the world’s riches for a further 25 years fro August 1, 2004 Bu this comes at a price. De Beers is setting up a $83 million cutting and sorting operation in Gaborone and crucially, will be delivering diamonds mined elsewhere for “aggregating” at the Botswana facility and then marketing the stones as a joint venture. And note, the extension is back dated two years to the previous one’s expiry date, which shows just how intense renewal negotiations have been.

Diamonds, of course, are the only real value creator for Botswana. For he rest there is eco-tourism and cattle ranching both small in comparison to diamonds. But Botswana does not want to end up with gaping holes and nothing else when the country’s last diamond has been dug out. Oppenheimer has shown the new arrangement in a positive light. Charles Wyndham, writing in the authoritative diamond industry publication, Polished Prices however slammed the De Beers so called supplier of choice marketing strategy that replaced the original De Beers marketing cartel which has proven most unpopular with the “supplier of choice” customers who have been pushed into advertising generic diamonds. He believes the supplier of choice strategy is faltering which if correct, helps explain the Botswana government’s move – a move that will ensue proper prices for the quality gems from the country.

Even Mogae’s biggest critics, who charged that the was in De Beers’ pocket following his famous line likening De Beer and Botswana to “Siamese twins” are now waxing lyrical about how Mogae’s new deal will move the diamond industry’s centre of gravity to Botswana.