Plans to move the De Beers diamond sorting to Botswana have been shelved indefinitely because of a “confidential and highly sensitive” issue between the mining giant and the government of Botswana.
Relocation of the De Beers aggregation function to Botswana was supposed to have started in the last quarter of last year. The Sunday Standard can, however, reveal that De Beers currently has no budget for the move of the aggregation project to Botswana, and has made no plans at all in contemplation that this will happen.
The collapse of the highly publicised plan emerged during a recent London lawsuit between De Beers and a computer company regarding a proposed system that would cover the aggregation function.
Diamond Trading Company finance director, Michael Page, testified during the case that the move of the aggregation project to Botswana was postponed [in 2008] because of the state of the economy. It was not until July 2009 that De Beers was able to release a press statement reconfirming its intention to relocate the aggregation function to Botswana and announcing that relocation would take place by the fourth quarter of 2010. Mr. Page agreed that by that time De Beers was sufficiently far out of the recession to restart the project. However, the documents showed that there was another reason which prevented the move from going ahead. The relevant documents, which showed this to be the case, had been heavily redacted on disclosure so as not to reveal what this reason was. It was referred to in evidence as the “blank” issue because it is confidential and highly sensitive.
Cross examined that “the real reason why you were not recommencing the aggregation project was the blank issue, wasn’t it?” Page told the court that, ”that remains a serious obstacle today.”
Asked whether the “blank” issue was capable of resolution as at May 2010, and he said “Well, I still don’t think it’s incapable of resolution, but it has become more intractable as time has passed.”
It is believed that De Beers is using the relocation of the aggregation to Botswana to force the government hands into accommodating their demands in the renegotiations for the renewal of the sales contract.
At the conclusion of his evidence Page said, based on many years of experience of dealing with the government of Botswana, he believed that the matter would be resolved next year when the renegotiations for the renewal of the sales contract were due to take place, but that in the meantime De Beers was in no position to make plans to resurrect the move of the aggregation project until this issue had been resolved.
De Beers and Botswana are now negotiating a new sales contract, with the current contract, which expired in December, being extended for three months to allow them to continue. The aggregation issue is apparently part of those talks.