Gemdax, the Antwerp-based diamond marketing and strategy consultancy boutique, arrived here┬áon Sunday┬áto undertake an assignment┬áaimed at widening the scope of the diamond beneficiation programme as they are putting in place key structures for the diamond exchange plan.
The┬á midÔÇôtier Antwerp diamond elite outfit has been engaged by Botswana government, which is┬á trying to use its dominant position┬á from the production side to link up with the entire diamond pipeline to ensure that┬á the┬á country enjoys the full benefits┬á of the resource even beyond the mining period.
Since its establishment in 2000, Gemdax has done consultancy for┬áa wide range of clients, including mining companies, trade bodies, and diamond houses throughout the length of the pipeline, from mining companies to retailing.
“We have engaged┬á a Belgian company to assist us with the work of establishing the diamond exchange,” Permanent Secretary in the Ministry of Minerals, Energy and Water Resources, Gabaake Gabaake, said,┬á adding that they “would like to come up with the best possible way of doing it” without┬á repeating the mistakes made by other African countries.
It is understood that though government┬á is planning to┬á be given a quota from┬á Debswana diamond production, it does not want to play the role of┬á “diamond dealer”┬á like what happened in South Africa where┬á the States Diamond┬á Trader has got as a flawed┬á business┬á model┬á as it is currently faced with a situation┬á where it gets more diamonds than they can sell at fair market value. The situation has also affected the finances of the States Diamond Trader, who cannot sustain the operations of its office.
The exchange, whose details are still being worked out, is likely to be tailored along the same lines with Antwerp exchange in Belgium and the Israeli exchange that is┬áin Ramat Gan – just outside Tel Aviv.
Although final details are still to be worked-out, trade volumes are expected to start at around US $500 million per annum but the tricky thing is that Botswana has to avail her produce to the market. “You cannot go around telling people that you are going to start trade while you do not avail your produce to them. As such, we still have to go through a process of negotiation with our partners (De Beers),”┬á┬á Director for Mineral Affairs, Nchidze Mmolawa,┬á has said.
De Beers and Botswana government’s current sales agreement expires at the end of the year and it is expected that government will come up with a suggestion where a certain percentage of Debswana production will go to the open market. Since the diamond mining started in Botswana some 41 years ago, the two partners have relied on the De Beers’ controlled Diamond Trading Company.
DTC heavily relies on the De Beers’ price book.
“We would like to develop diamond trading in Botswana. What we have now is DTCB, which is all about buyers and polishers who do that for export. There is nothing much in terms of traffic volume,” Mmolawa said.
For the exchange to attract the world’s attention, Sir Seretse Khama International Airport needs a serious facelift than what is expected to be unveiled next month and┬áhave some reputable airlines and build a five star hotel in Gaborone. The plan of the country’s most ambitious programme is to allow diamond sellers and buyers to fly in either on commercial or private jets┬áto trade on regular basis.
However, some of the issues that need to be dealt with n include tighten the existing semi and precious stones laws to ensure that rogue traders are kept at bay. Further, as some of the goods that are expected to be sold at the exchange will be originating outside BotswanaÔÇöthere should be clear guidelines regarding ensuring the traceability of parcels from their source of origin.
Further, banking laws also need to be attended to ensure that Botswana is not used as a hub for money-laundering.
If government fails to get it right the move will have a negative impact on the beneficiation plans across the southern African region. The Diamond Exchange will bolster the efforts of the relocation of the DTC from London to Botswana which is expected to yield in the marketing, sorting and valuation of diamonds in Botswana.
Further, it is planned to yield the aggregation of all De Beers production in Botswana. De Beers has mines in Botswana, Canada, Namibia and South Africa. The relocation of the DTC to Botswana has seen the establishment of 16 sightholding companies in Botswana and the number of┬ádealers is expected to rise with the coming in of the exchange.
DTC Botswana has also resulted in the establishment of the diamond bank, diamond insurance companies, security companies and gemological institute in Botswana.