Sunday, May 22, 2022

Masisi in bid to turn Botswana into a diamond superpower

A few months after assuming the chairmanship of the Kimberly Process, President Mokgweetsi Masisi has not set his eyes on hosting the anti-conflict diamond watch body’s secretariat in Gaborone and subsequently persuading African countries to sell their diamonds through the government owned Okavango Diamond Company (ODC).

This is part of President Masisi’s grand plan to ensure that Botswana plays a more prominent role in the industry as No. 1 player Russia faces international outrage following its invasion of Ukraine. 

Botswana is currently vying to host a permanent new headquarters and secretariat for the Kimberley Process, which seeks to combat trade in the gems from conflict areas, part of the government’s effort to turn the country into a global industry hub.

President Masisi was in Brussels recently lobbying European Union (EU) member states to back the country’s bid to host the Kimberley Process (KP) Secretariat in Gaborone ahead of China and Austria who have also shown an interest.

This emerged from a meeting between President Mokgweetsi Masisi and Philippe Michel-Kleisbauer, president of the Botswana-France National Friendship Group on Tuesday at his offices.

“Allow us to develop our resources, persuade other EU countries not to extract the resources here and have it managed in Europe. We find it not consistent with the values that it expresses so I want to plead with you to support Botswana’s bid to host the Kimberley Process Secretariat,” Masisi said to Michel-Kleisbauer.

Botswana, which took over the rotating chairmanship of the Kimberly Process plenary from Russia after its last session in November, will go up against China and Austria to host the watchdog’s permanent secretariat. It’s unclear when the winner will be named or when the next Kimberly Process plenary will be held, partly because of the war in Ukraine. 

When southern African diamond-producing countries met in Kimberley, South Africa, in May 2000, to stop the trade in “conflict diamonds” and ensure diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments, they came up with the KP process. The Kimberley Process Certification Scheme (KPCS) was then set up in 2003.

Austria and China had both shown interest in hosting the KP secretariat. EU countries participated in the KP under the umbrella of the EU as a single participant.

They offered a uniform EU KP certificate for diamonds verified by Belgium, the Czech Republic, Ireland, Germany, Portugal, Romania, and Italy. Austria played a cameo role despite interest in hosting the secretariat.

For that, Masisi said Botswana – the current KP chair on a rotational basis and deputised by Zimbabwe – deserved to be considered ahead of Austria.

“Austria has no diamonds. The significance of Botswana diamonds on the economy is unlike any in the world; diamonds mean everything to us. Every good story you have heard about Botswana is predicated on the production, safe selling and responsible utilisation of diamonds,” he said.

Botswana is the world’s top diamond producer in terms of value and second in terms of volume behind Russia. Other southern African countries that produce diamonds are South Africa, the Democratic Republic of Congo, Lesotho, Namibia, Zimbabwe, and Eswatini. In Zambia, there’s exploration work underway.

Masisi’s administration is monitoring the fighting in Ukraine and the effect it might have on the diamond market. The country held a successful gem auction last month, and doesn’t expect the war to have any immediate impact.

Over the longer term, sanctions against Russia could curtail demand for its gems, which would push up prices from stones produced elsewhere, but there it a limit as to how much they can rise before demand tails off, Masisi said in a recent interview with Bloomberg.

Most of Botswana’s gems are mined by Debswana, a joint venture between the government and Anglo-American Plc unit De Beers. A 10-year diamond-sales pact between the government and De Beers expired in 2020, but has been extended until the end of June this year. 

President Masisi, who has been pushing for the industry to create more jobs and for more diamonds to be cut and polished in Botswana told Bloomberg that neither he nor De Beers want another extension and are busy negotiating a substantive new deal. It took years to negotiate the last deal, which led to De Beers moving all its diamond selling and sorting staff to Botswana from London.

“We want to get into the whole value chain,” said Masisi, who has been in office since 2018. “We want to be the best bearers of knowledge on diamonds in the world.”

It is understood that Masisi’s ultimate plan is to persuade other African countries to sell their diamonds through the Okavango Diamond Company. Some sources close to the government enclave are even talking of African diamond producing countries setting up a union styled along the lines of OPEC+, The Organization of the Petroleum Exporting Countries Plus. OPEC+ is a loosely affiliated entity consisting of the 13 OPEC members and 10 of the world’s major non-OPEC oil-exporting nations. OPEC+ aims to regulate the supply of oil in order to set the price on the world market.

With African Diamond Producers responsible for more than 60% of the global diamond output, it is believed they can leverage their critical mass to regulate the supply of diamonds in order to set the price on the world market. As with Russia, the biggest producer of diamond by volume, now facing international sanctions, this provides a window of opportunity for African diamond producers

Michel-Kleisbauer who also sits in the French National Assembly, assured President Masisi that he would “elevate” his request in France.

In 2020, French fashion house Louis Vuitton acquired a 549-carat stone unearthed at the Karowe Mine in Botswana. The stone, named “Sethunya”, is Setswana for flower.

It was the second gem bought by Louis Vuitton from Botswana in a space of eight months. The first was Senwelô, the largest diamond found in Botswana to date.

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