The relocation of De Beers to Botswana in 2012 has benefited the country and the sub region economically, by amongst other things, supporting jobs creation in ancillary services such as banking, security, supply chain and insurance services.
This was said by the De Beers Group of companies Head of media relations officer Lyrette Gould when answering a questionnaire from Sunday Standard on how the relocation of the company has benefited the country.
She said the relocation has caused billions of dollars to flow through Botswana’s banking system. She further explained that the relocation has caused the company to complete the refurbishment of its existing residential properties in Gaborone at a cost of $2.5 million and the leasing of 55 properties for employees and their families in Gaborone.
Further than that she said furniture in De Beers Global Sight holder’s Sales building as well as other material such as cookery were made by local businesses and that regular influx of diamond entrepreneurs to Botswana for sights has benefited the country’s domestic services sector providing opportunities for businesses involved in such areas as leisure, transport, catering and hotels.
De Beers has also established important activities such as Vendors’s Day since relocating to Botswana. She further noted that this has created a stronger network of domestic business in Botswana and provides opportunities for all sizes of companies to generate business opportunities.
The relocation of De Beers follows after a lot of lobbying that the country should relocate to Botswana so its citizens can benefit from job creation.
Recently De Beers painted a gloomy picture of the industry in which demand will outstrip production growth in the next decade coupled by rising costs as mines go underground.
The company ÔÇô with most of its meat in Botswana where it owns Debswana on a 50/50 basis with the government of Botswana, said that even under scenarios of volatile or weaker global economic growth, demand for diamonds is expected to show positive real growth in the next decade.
“Positive demand growth for diamonds will almost certainly outstrip growth in carat production in the next 10 years, given the lack of major new discoveries in the last decade and the projected production slowdown in several existing mines,” the company said in 2014 Diamond Insight Report released this week.
The company said a positive supply demand outlook is shared by a number of external experts including McKinsey & Company which sets out four potential future scenarios for the diamond industry.
“In every scenario, demand growth outstrips production growth. De Beers has undertaken some modelling of potential rough diamond supply and demand based on McKinsey’s ‘Diamonds are Forever’ scenario, and the relative supply….”
According to Goldman Sach, the demand is expected to expand at a Compound Annual Growth Rate (CAGR) of 11 per cent in nominal value between 2013 and 2017, driven by Cyclical recovery in US consumer spending on luxury goods as economic growth recovers.
On the downside, global natural supply is expected to increase at an average rate of 5.2 per cent between 2013 and 2017. RBC on the other hand projects that demand is set to strengthen rapidly, determined by the recovery of consumer confidence in two key markets of China and the U.S. It however remained bullish on production which it said will be increased by a set number of projects coming online including: Petra’s proposed expansion of Finsch and Cullinan, which will lift production from 3 million carats per year in 2014 to over 5 million carats per year in 2019.