Friday, July 12, 2024

Synthetic diamonds spell difficult future for Botswana’s economy

According to research statistics, lab manufactured diamonds account for only 2 percent of the global trade that stands at over $US 17billion.

Estimates are however that by 2023, jewellery from synthetic diamonds could reach USD 5 billion, which is 5 percent of global diamond jewellery.

Clearly this is an industry on an upswing trajectory, eating exactly on natural diamonds.

Botswana should be worried.

There is a global structural shift playing out right before our eyes.

There are indications based on the same data that cutters especially in India and Israeli are growing increasingly wary of restocking natural for fear of the growing influence of synthetics.

In other words the growth in synthetics is creating anxiety and also uncertainty for long term decision making among cutters.

Last year Botswana Government announced rather gleefully that De beers will be joining synthetic diamond production.

And that as a significant shareholder in De Beers, Botswana had given its blessing.

We are still not satisfied about that decision by Botswana Government,.

Rather than taking De Beers’ word for it, and also following De Beers like a sheep being dragged to slaughter, Botswana Government officials should ask De beers pointed questions about the rational of going synthetic.

The first question to ask has to do with financial implications on the national budget of Botswana.

As a country we may be shareholders in the adventure of De Beers to take synthetic diamonds mainstream, but such a shareholding can never in the foreseeable future be a substitute of what real diamonds are doing to Botswana.

We should be careful as a country not to participate and even lend a hand by putting money into decisions that are tantamount to fastracking our economic death.

As a country we have relied too much on De Beers.

We have paid a heavy price.

But on this one, what our Government is doing is unpardonable.

Government has not been open enough on the ramifications of synthetic diamonds to Botswana.

For years Botswana Government and De Beers invested a fortune in countering synthetics from encroaching into the market.

Quite clearly it is a fight that De Beers and Botswana Government have lost.

But for them to turn around and say they want to become players in the same industry they have long worked at thwarting, cannot happen without a lot of serious explaining by the two parties.

As of now no such explanation has been coming forward.

The price of diamonds has always been premised on its rarity as a natural stone.

But being made in a lab, synthetic diamonds are dependent on technology.

And as they say technology is a race to the bottom.

And in no time, based on technological advances, a stone from a lab fetching millions of dollars today will in the fullness of time be a few hundreds of dollars, or less.

It might take longer to affect big stones.

But the majority of stones are small.

And it is these stones that are very vulnerable to laboratory produced synthetics.


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