Sunday, June 16, 2024

Masire’s move to ODC signals Masisi’s bid to contain De Beers

President Mokgweetsi Masisi this week withdrew Mmetla Masire from his position as Permanent Secretary in the Ministry of Mineral Energy and plans to deploy him as Managing Director of state-owned Okavango Diamond Company (ODC) a move that is setting the stage for Botswana to takeover a bigger share of the diamond sales from De Beers.

ODC is a rough diamond marketing company that is wholly owned by the Botswana Government and is a direct competitor of De beers for Debswana’s run-of-mine production. The parastatal which offers its global customer base open access to supply of the full range of rough diamonds sourced from Botswana has access to 15% of Debswana’s diamond production.

Its mandate is to provide the Botswana Government with a direct route to market its rough diamonds and to support the ongoing transformation of Botswana into a leading rough sourcing destination.

Masire, who hitherto was Director at Debswana and Chairman of the Board at Diamond Trading Company Botswana (DTCB) has first-hand experience of the extent to which De Beers’ control of the two joint venture companies with Botswana government has disadvantaged ODC.

Masire is also a key player in the ongoing negotiations Between the Botswana government and De Beers which is expected among other things to increase the ODC’s current access to 15% of Debswana’s diamond supply.

Masisi’s plan to contain De Beers first became apparent a year into his presidency when he fired the government diamond valuer, a British national who was believed to be a De Beers Trojan horse.

The task of the government diamond valuer is to certify that the parcels are sorted accurately in terms of the price list giving comfort to the Botswana government that the mine production is accurately valued – that the carats produced are exported at the values set by the Price Book.
Fears that the diamond valuer was a De Beers guy have not been helped by an investigation which revealed how he failed to protect Botswana from losing billions of Pula in under-priced special stones and taxes losses due to alleged profit shifting by De Beers.

Shareholder tension has been simmering between the Botswana government and De Beers since the super exceptional 41 carat blue diamond  was discovered at the Debswana Orapa Diamond Mine towards the end of 2018.
The cold war has been playing out behind the scenes since President Mokgweetsi Masisi scuppered manoeuvres by the Botswana government diamond valuer to have the gemstone sold through De Beers.
Masisi’s move to stop the super exceptional gem stone from going to De Beers was a first in the history of the partnerships and marked a shift towards closing the revenue rort pathway which  has enabled the mining giant to rob Botswana out of billions of Pula annually.

The blue diamond with an estimated value of US $200 million (about P2 billion) is the first of its kind to be discovered in Botswana since independence in 1966.
Over the years such kind of diamonds have fetched between $70 million and $200 million across the world, pricing them higher than the much publicized Lesedi La Rona which was sold for $53m to a London Jeweller.
The government valuer who is a British national lobbied to have the gemstone sold through De Beers. 

The move to have the blue diamond sold through De Beers was however thwarted by President Masisi who during his tour of the Diamond Park in 2018 indicated that he wanted the stone sold through the government owned Okavango Diamond Company (ODC). The crusade by the government valuer to have the blue diamond sold through De Beers stoked speculations that the government diamond sentinel was doing the bidding for De Beers.

Masire is expected to kick start his new assignment at the country’s key diamond company in few weeks. The ODC lucrative post became vacant last year following the termination of former MD Marcus ter Haar’s contract.

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