Saturday, September 19, 2020

De Beers, Debswana in cloak and dagger intrigues

Sheila Khama makes no secret that her diary has a lot of entries that say, “date with journalists.” Beaming at a spread of journalists seated around a conference table nicely dressed up into a dining table, the De Beers Botswana Managing Director is bubbling with come hither wisecracks like “my door is always open.”

Relations between local journalists and De Beers Botswana, the other half in the Debswana partnership, are thawing, raising more questions than answers: Can De Beers and Debswana share the limelight? What does De Beers hope to achieve by increasing its profile in Botswana? Can the two big fishes survive together in the small pond that is Botswana?

“As in any relationship we do not always agree on everything with government,” Sheila Khama said recently. This does not in anyway suggest a fall out in the four-decade long marriage between De Beers and government, but something is stirring.
Since De Beers reopened its office in Gaborone two years ago, it has stayed in the fringes playing cheerleader to Debswana, who are enjoying the limelight. De Beers has, however now decided to compete for the lime light with Debswana. There is already indications that the media savvy Khama may soon be hogging publicity, pushing Debswana and its MD, Blackie Marole, to oblivion. And that may be the point.

Insiders say behind the neatly constructed façade of mutual commitment to the long-standing relations between government and De Beers lurks a hotbed of cloak and dagger scheming, mutual resentment and deep-seated distrust. A peek behind the scenes reveals a heightened state of tension with key personalities privately grumbling that the relationship endures only because the stakes are so high that neither of the parties can afford to rattle each other too hard as to rock the boat, let alone walk out of the marriage.

The two sister companies are, however, marching to the beat of different drummers. Debswana, which is partly government owned, is, among other things, a vote-winning vehicle, hence its huge social responsibility budget. De Beers, on the other hand, is preoccupied with the bottom line and reputation, and is unhappy that Debswana is not running the Botswana diamond mines efficiently.

Driven by profit motives, De Beers has been trying to wrest control of Botswana’s mines from Debswana. De Beers recently tried, although unsuccessfully, to lobby government to give them management contracts for all Debswana mines. This tug of war has put paid to efforts by the two partners to present the marriage to the world as stable, healthy and considered.

Calls by De Beers to be given a management contract come at a time when Debswana management is grappling with a fair share of troubles; low staff morale and a heavy tide to stop staff turnover, especially among the engineering staff, a composite result of a number of factors among them a refusal by the board to approve a new salary structure designed to stem the problems.

“As in any other relationship we do not always agree on everything with government,” is the farthest De Beers Botswana CEO Sheila Khama is prepared to go in her attempts to shed light into what insiders say is a relationship increasingly undergoing a rough and tumultuous patch.

“De Beers has approached a section of government with that proposal. For obvious reasons it was never officially deliberated or debated upon. As government, we feel very strongly that given the importance of Debswana, the company should be used as a vehicle to develop skilled manpower that could be exported,” replies Dr Akolang Tombale ÔÇô Permanent Secretary in the Ministry of Minerals, underscoring the fact that over and above financial profits from Debswana, government and the country expect more from the company.

“The management contract thing surfaced after the agreement was signed,” said Tombale.
Tombale says De Beers feel they can do a much better job than the current Debswana management, but government holds a totally different view.
He maintains that Debswana will remain an independent company.

It all started last year when Botswana government refused to renew the mining leases for the Orapa and Jwaneng Mines when they expired.
The tense and often fragile negotiations that followed led to a rewriting of the decades old agreement at the end of which De Beers felt they had lost a lot of ground.

Although the two parties continued, after the agreement, to peddle the public myth that theirs is a cozy relationship, the resolute and steadfast manner at which Botswana government with the assistance of Israeli consultants held fought their corner and resorted to arm-twisting before renewing the leases had all the hallmarks of a stressed relationship.

Many within the international diamond industry had come to take it as a given that government would automatically renew the mining lease of both the Orapa and Jwaneng mines. That, however, was not to be.

It came as a shock especially to De Beers when, instead of formalizing the renewal of leases, government put a number of issues and preconditions on the table.

It was a well-crafted government strategy meant to extract more and new concessions from De Beers.
It would seem like government had long been preparing to strengthen and increase its foothold on the relationship not only as a way of cooling down popular resentment at home, bred by sentiments that while diamonds have been the country’s mainstay, the relationship has somewhat been tilted in favour of De Beers.

While diamonds have always provided sufficient revenues that bankrolled the country’s development process for close to four decades, government, it turned out, was never content with the amount of added value the country received from minerals.
It, therefore, seized on the opportunity provided by the expiry of leases to viciously present its stance that it was time Botswana became the world centre of diamond beneficiation.

Government negotiators would no longer accept the time honoured presumption that diamond beneficiation was not viable option for Botswana.
Over and above new beneficiation outlets, government representatives led by Tombale and his Deputy, Kago Moshashane, pushed for increased government stake in the overall benefits.
Although the figures remain confidential, available research indicates that Botswana government could be getting as high as 88 percent of profits generated either as royalties, special taxes and or dividends.

De Beers was not impressed.
To underscore their unhappiness with the way the mines are run, De Beers approached the Office of the President, Vice President Ian Khama, in particular, broaching the idea of being given the management contract to run Debswana.
Although Khama gave them a hearing, the idea did not pass.

The reasons given by government for declining were more political than commercial.
Although officially the two parties maintain that their relationship is as healthy as ever, there are indicators that De Beers is not altogether happy with certain aspects.

Key among the factors is that De Beers feels very strongly that the Botswana mines, owned and operated by Debswana, are some of the least efficient in its stable.

Debswana’s importance to De Beers’ bottom line does not need to be over emphasised.
With mines at Orapa, Jwaneng, Letlhakane and, lately, Damtshaa, Debswana accounts for close to 70 percent of De Beers’ revenue stream.
Although the troubled relationship remains to a very large extent manageable, latest events point out that the storms have not yet settled. There are allegations that within the Debswana board of directors there are individuals eyeing Marole’s position of Debswana MD.

There is also an ongoing investigation at Orapa mine to establish who could have authorized the planting of a clandestine security camera into one of the toilets inside the treatment plant.
The incident has only brought to the fore tensions and grudges that have been simmering underneath.
Even before the investigators finish and release their findings, there are internal murmurs pointing a blaming finger at the engineers that are from time to time seconded to Debswana mines from De Beers.

Another problem where the two partners would not agree is on the question of the Central Kalahari Game Reserve, from where Basarwa have been uprooted.

Still smarting from a costly and protracted public relations nightmare presented by the “blood diamonds” a few years back, De Beers has been trying to prevail on government to compromise in favour of Basarwa.

Delegations by senior De Beers Executives, led by the company’s patriarch, Nicky Oppenheimer, have made a number of representations to government officials, including to President Festus Mogae, exhorting government to be flexible in its handling of the CKGR dispute.

That has only served to inflame tempers, with Mogae publicly chastising De Beers of interference.
Addressing the Botswana government’s heads of foreign missions on the issue late last year, President Mogae just fell short of accusing De Beers of racism and condescension.
Just how far it will go remains anybody’s guess.

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