Botswana government said it has engaged Gemdax, the Belgian diamond consultancy boutique, to help it achieve its aim of being an international diamond centre, attracting critical mass of downstream activities, including diamond bourse.
In a statement handed over to Sunday Standard head of Diamond Hub, Jacob Thamage said the aim is to “increase the country’s share of diamond downstream activities to bolster its image as the world’s leading rough diamond producer”.
“One of the objectives of Diamond Hub is to establish a diamond trading platform, because rough diamond trading is a natural extension of Botswana’s position as leading diamond producer,” he said, adding that they have engaged Gemdax to develop an operational “framework.”
Gemdax’s Antwerp-based experts were in Botswana for one week until last week Friday to try to work out a plan that is geared towards meeting their own brief.
They had meetings with key players, such as the DTC Botswana, to try to curve a plan that is in line with the demand of the ministry, which are to develop an operational plan, come up and define the role of strategic partners and assist with the development of “selection criteria, including assessment procedures for strategic partners in alignment with Botswana’s objectives”.
The mid ÔÇôtier Antwerp diamond elite outfit rolled their sleeves in line with Botswana government demands to present their first phase of the report in the next six weeks as it weighs options of using its dominant position from the production side to link up with the entire diamond pipeline to ensure that the country enjoys the full benefits of the resource even beyond the mining period.
Since its establishment in 2000, Gemdax has done consultancy for a wide range of clients, including mining companies, trade bodies, and diamond houses throughout the length of the pipeline, from mining companies to retailing.
“We expect them to give us the first phase of the report in six weeks and the second phase will largely depend on what they say in the first report,” Thamage told Sunday Standard on Friday.
It is understood that though government is planning to be given a quota from Debswana diamond production, it does not want to play the role of “diamond dealer” like what happened in South Africa where the States Diamond Trader has got as a flawed business model as it is currently faced with a situation where it gets more diamonds that 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 his 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 in 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),” Director for Mineral Affairs, Nchidze Mmolawa has said in the past.
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 have 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 to trade on regular basis.
However, some of the issues that need to be dealt with include tighten the existing semi and precious stones laws but at the same time giving more people an opportunity to deal in rough diamonds within the country, and 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 the traceability of parcels from their source of origin in line with the demands of the Kimberley Process.
Further, banking laws also need to be attended to ensure that Botswana is not used as a hub for money-laundering.