DTC Botswana and its first 16 sight holders signed their historic contract which will see the sustainability of the beneficiation process and the ultimate relocation of the aggregation exercise from London to Gaborone.
The contract ensures that Botswana will sell rough diamonds to the local cutting and polishing industries valued at US $ 360 million (about P 2.2 billion) by next year which will be upped to US 550 million by 2009.
“This is a very big day for us and we have agreed on a contract of supply and we are going to sell to 16 clients operating in Botswana,” Managing Director of DTC London, Varda Shine, who is also the chairperson of DTC Botswana, told The Sunday Standard.
DTC Botswana is a 50/50 joint venture between the Botswana government and De Beers’ DTC London, which has been the dominant player in the sales of rough diamond.
The new drive, which will be spearheaded by DTC Botswana’s pioneering Managing Director, Brian McDonald, with the support of DTC London’s director for Beneficiation, Tim Dabson, is largely seen as an answer to a call by the diamond industry which was clamouring for the setting up of downstream activities in the producer countries to deal with socio-economic challenges.
The five major producing countries, Angola, Botswana, DRC, Namibia and South Africa, said the industry needs to “break with the past” and support initiatives aimed at erasing poverty in the world’s poorest continent.
South African minerals and energy minister, Buyelwa Senjico, said┬árecently at the Antwerp Diamond Conference that producer countries are struggling┬áto fight poverty in their own nations adding that “for a long time,┬ácountries which are┬áendowed with mineral resources have been exploited and we have to break with the past”.
Martin Rapaport,┬áan old hand in the diamond industry and consultant, called for a sea-change to address poverty in Africa, which he dubbed “revolutionary.”
“The level of poverty and unemployment in Africa is revolutionary. Life expectancy has dropped and┬áin a number of countries,┬áchildren do not reach the age of five and women are getting raped everyday,” he said.
“ There would be wars (in Africa) if beneficiation does not work,” he warned.
As part of the new changes, Botswana, Namibia and South Africa will set-up their own DTCs (Diamond Trading Companies) separate from the main one in London. Under that agreement with the world’s leading diamond producer, De Beers, the countries will be allowed to sell a certain portion of their produce to┬á cutting and polishing┬á companies which have established in their own countries.
However, Botswana has been given a bigger role of ultimately aggregating┬á diamonds from other De Beers mines if┬áits marketing, valuing and sorting exercises become successful.
DTC Botswana is expected to create 3000 new jobs in its first two years of existence, which will be directly linked to the cutting and polishing industries, but the figure could go as high as 5000 if support industries such as diamond banks, courier services, insurance, transport, restaurants and hotels are included.
“We are very excited about this. Creating 3000 jobs is not a joke and bringing technology is not a joke either,” Deputy Permanent Secretary in the Ministry of Minerals, Kago Moshashane, told The Sunday Standard on Wednesday.
At the end of the three-year contract, the Botswana government and De BeersÔÇöjoint partners in DTC Botswana ÔÇô are expected to increase the number of sight holders and, at the same time, work on concrete plans of bringing all the aggregation of De Beers rough diamonds to Botswana by March 2011.
If the current DTC London’s selling figures are to be relied upon, DTC Botswana will be able to sell diamonds to the value of US $ 5 billion per annum (about P 36 billion) by 2011 and, according industry experts, local diamond manufacturing industries will be seating somewhere around US $ 2 billion per year. With such a lot of money circulating within Gaborone, the banking sector and government will benefit from transaction commissions and taxation, respectively.
“We are working on sorting and marketing and once we achieved that, we will look at aggregation,” McDonald said.
┬á┬áIn 2008, Botswana will do its sorting, valuing and marketing while aggregation will still be done in London. DTC Botswana will start limited aggregation by 2009 until the expiry of the contract in 2011.
However, McDonald said they have already explained to the current sight holders how the point scoring (allocation) will work.
“We have communicated to each of our clients how much we will supply them from 1st January 2008, provided, of course, their factories are operational, and we will be supplying them directly here in Botswana from April 2008. This will help create in excess of 3000 jobs, new skills and foreign investment in Botswana,” McDonald said
All the 16 clients have managed to pass a rigorous test set by the Botswana government and De Beers’ sorting and marketing arm, DTC London, which include strong financial standing, manufacturing capabilities and government’s eleventh hour demand of ensuring that all rough bought through DTC Botswana will be manufactured here.
“We are pleased that all 16 licences holders were successful and are delighted to welcome on board our new clients for our first supply contract period. All our new clients have the requisite skills, experience and global reach to ensure that Botswana develops a world-class competitive, sustainable and economically efficient industry,” Shine said.
The 16 companies are: Ascot Diamonds, Dalumi Botswana, DDA of Botswana, Diamond Manufacturing Botswana, Eurostar Botswana, H&A Cutting Works Botswana, Lazare Kaplan Botswana, Leo Scharter Botswana, Moti Ganz Botswana, Pluczenik Diamond Company, Rand Precision Cut Diamond, Safdico Botswana, Suashish Diamonds Botswana, Teemane Manufacturing Company, Yerushalmi Brothers Diamonds Botswana and Zebra Diamonds.