Monday, August 15, 2022

De Beers concerned as Windhoek deal sours Botswana’s mood

Harry Oppenheimer, his son Nicky and two other De Beers’ former chairpersons are gazing down at Sheila Khama and me.

Up there, enjoying the pride of place among the famous faces on the walls of the spacious conference room is a framed broadsheet double spread Sunday Standard advertorial of last year’s agreement between De Beers and the Botswana government.

The newspaper spread is still in printing press crisp. However, fresher headlines on the news stands warn that the agreement launched amid a flurry of promotions and great expectations a few months ago may be falling apart.

The De Beers Botswana CEO and I are huddled at the head of a conference table. We are taking stock. As it turns out, one thing happened that ÔÇö in retrospect ÔÇö nobody expected: Even before the ink on the agreement had dried, the Namibian government, apparently envious of the good deal the Botswana negotiating team had extracted during those long retreats in Kasane, decided they wanted the same for their country.

The result was an agreement signed on Tuesday between Namibia and De Beers. The agreement reads like an abridged version of the Botswana agreement.

So when the Namibian government and De Beers started popping champagne bottles and dispatching joint press releases, Batswana smacked their lips in satisfaction saying, “If Namibia has decided to copy us then we must have gotten a great deal,” Right? Wrong!

The Botswana Guardian this week ran a story warning that the Namibian agreement may upset President Festus Mogae’s plans to have the entire region’s diamonds processed in Gaborone.

The newspaper quoted Permanent Secretary in the Ministry of Minerals Energy and Water Affairs, Akolang Tombale, who is also a non-executive director on the board of the De Beers Group, saying Botswana was not very sure about the exact details of the Windhoek agreement.

“But from the little that we have been able to gather, we are led to believe that this is not a good thing for us as a diamond producer and aggregation outlet.” The Botswana Guardian and Tombale were saying in public what most Batswana are whispering privately.

As the woman in the eye of the raging storm on how De Beers exploited Botswana before signing the current agreement, Khama is used to a little controversy. Even so, Botswana’s reaction to the Windhoek agreement feels, well, a little hysterical. “I regret that Batswana may think that the Namibian agreements in any way undermine Botswana’s plans. De Beers has not departed from its commitment to Botswana.”

According to the Windhoek Agreement, De Beers will create a local sales outlet ÔÇö the Namibia Diamond Trading Company.

The marketing unit will sell up to 5 percent of the nation’s rough diamonds to local cutting factories and export the rest to De Beers Diamond Trading Company in Gaborone for international sales.

The De Beers Diamond Trading Company set up by last year’s Gaborone Agreement is owned 50-50 by De Beers and the Botswana government. Traditionally, De Beers has exported virtually all of its production from Africa to London to be mixed with De Beers’s global output and distributed worldwide to selected clients.

De Beers already has a 50-50 joint venture with Namibia, named Namdeb, for mining diamonds, but the renewed agreement covers a broad spectrum of activities, De Beers Managing Director, Gareth Penny, said.

“It aligns all activities from exploration and mining to evaluation and selling of the diamonds between De Beers and Namdeb,” Penny said at a signing ceremony.

But Khama insists, “This will not take anything away from the agreements between Botswana and De Beers.” She explains that it is necessary for Namibian diamonds to be sorted in Namibia because “regulators in each country must know what is being extracted from their ground in terms of quantity and quality.”

This she says helps in accounting for customs and tax purposes. It will also enable Namibia account to the member of the Kimberly Process. “It is for governance and accountability and does not in anyway undermine the agreement between Botswana and De Beers.”

Namibia, along with fellow southern African diamond producers Botswana and South Africa, has been pressing De Beers to release more rough diamonds locally for their cutting sectors, aiming to create more jobs and boost economic growth.

Khama explained that a portion (up to 5 percent) of Namibia’s produce will be sold to local cutting factories and the rest will be exported to Gaborone for aggregation. “It is intended that Botswana will be the home for aggregation replacing London.”

Goods from the De Beers mines in Canada, the purchases from Russia, production from the South African and Namibian joint ventures will be brought to Gaborone where they will be aggregated on size, value, quality and created into parcels that will be sold from Botswana.

“This does not only make Southern Africa the biggest diamond mining region world wide, but the home for the largest diamond trading company in the world”, she says.


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