De Beers Global Sightholder Sales Vice-President, Kevin Goodrem has allayed fears that the local diamond industry’s long term viability is under threat, despite numerous challenges it is currently facing on the back of low productivity and tight margins. The stringent trading conditions in the industry recently led to the closure of a few cutting and polishing firms, sparking fears that Botswana’s beneficiation dream was going up in smoke.
However, Goodrem is adamant that the industry will turn the tide in the not so distant future and be able to beat the odds, provided appropriate business fundamentals are pursued with vigour.
“A satisfactory regulatory environment should propel the future sustenance of the fledgling industry,” he said.
When addressing a bi-annual general meeting Botswana Chamber of Mines (BCM) in Orapa last week, Goodrem maintained that it was not all doom and gloom for Botswana’s beneficiation project and expressed optimism that the industry will stabilize in the not so distant future. He added that there is no justification why Botswana should not compare with success stories recorded in places like Antwerp, India and China.
Goodrem’s optimism is premised on the fact that De Beers sold a whooping US$ 920 million (approximately P920 million) worth of rough diamonds to local Sightholders in 2014. He dismissed the findings of a research analysis authored by Professor Roman Grynberg, formerly of Botswana Institute for Development Policy Analysis (BIDPA), who painted a gloomy picture of the industry, saying the professor relied heavily on the different reports provided by Bank of Botswana and Statistics Botswana.
“Yes, a few firms closed on the back of tight margins. But there are new Sightholders under construction, which shows that the rough phase will pass. The sale figures will rebound in the not so distant future”, said Goodrem.
He however admitted that the local industry suffered a market downturn in Q4:2014 as it recorded retrenchments, but pointed out that government has established a task force comprising all stakeholders to look at the problem and map a way forward. He also highlighted low productivity, including hours worked per week per worker, as key problematic factors that contributed to the failure of some firms in Botswana.
“The hours worked in Botswana are significantly lower than those in India and China. Also, the final cost of cutting per carat was higher in Botswana compared to India and China which have bigger populations with sufficient skills supplies. Other factors that are hampering growth in the local diamond industry include tight margins and lack of variety caused by production of the same items,” said Goodrem.
Going forward, Goodrem said it is imperative to enhance distribution strategies and upscale skills, especially because the industry is still in its infancy in the region. Despite these hurdles, Goodrem did not mince his words when he assured his audience that the market will recover in due course. Contributing to the beneficiation debate, former Tati Nickel General Manager Sebetlela Sebetlela asked why Botswana, as the world’s biggest producer of the gem stones, does not have an edge over its competitors in the beneficiation process.
For his part, BCM Executive Director Charles Siwawa asked if there were any available opportunities for growth in the local beneficiation industry, to which Goodrem responded by saying the emergence of two Sightholders in addition to the existing 19 was indicative of good prospects. In conclusion, Goodrem acknowledged that there are no regulatory impediments to growth in the industry, saying the regulatory framework is “satisfactory” and should shore up the industry’s future viability and sustenance.