Tuesday, December 7, 2021

The diamond beneficiation that never was…..

The global mining industry calls the process “beneficiation.” This is a deliberate effort to build an additional market around the mining sector so that citizens of producer countries like Botswana can make money, not just from the sale of rough diamonds, but also from their cutting and polishing.

Neighbouring South Africa – a key player in the diamond sector globally has implemented beneficiation in the diamond sector for several years. Botswana on the other hand began its catch-up some five years back following a new diamond sales deal with global mining giant ÔÇô De Beers Mining Company. Through a joint venture known as Debswana Ming Company, the Botswana government and De Beers Mining Company owns four diamonds mines – Jwaneng, Letlhakane, Damtshaa and Orapa.

In September 2011, the two partners signed a 10 year contract for sorting, valuing, marketing and selling of Debswana diamond production. De Beers then relocated its sales operations known as Diamond Trading Centre (DTC) from London to Gaborone by the end of 2013.

The relocation was received with so much glamour and pomp with the hope that it would not only boost the country’s economic diversification agenda but will result in “active” participation by the locals in the diamond supply chain.

By 2014, the then Coordinator of the Diamond Hub, Relocation and Opportunities Mmetla Masire said, “We fundamentally have the model that we wanted. It is now a question of growing it so that it gives us what we want. We now have to come up with a sound and robust strategy implementation program”

Despite Masire’s claim, and the unprecedented investment made by the country since the relocation, questions are still being asked about the level of beneficiation and active participation amongst the locals. Apart from the jobs created (3700) ÔÇô some of which were later lost, the country has few claims relating to beneficiation and its linkages with the rest of the domestic economy.  

The level of penetration for the locals who are aspiring to become “active players” in the cutting and polishing sub sector remains very low. More than 50 percent of the cutting and polishing firms that survived the closures which happened a few years back are foreign owned.

Pundits strongly suggest that the imminent beneficiation failure is a direct result of the absence of an industrial policy that addresses the fundamental issues of productivity in infant industries such as diamond cutting and polishing.

While he cannot directly admit all the flaws in beneficiation, the Minister currently responsible for Minerals, Eric Molale acknowledge that part of the problem has been caused by lack of skills amongst Batswana.

Before he could talk about the failures, Molale, who was ironically the chief negotiator for the Botswana government during the 2011 talks with De Beers is quick to point out what he says are key achievements of the deal.

He singles out the state owned Okavango Diamond Company (ODC) as a great achievement. Pursuant to the provisions of the 2011 sales agreement, ODC was established on twofold – to open up additional supply to support the local cutting and polishing industry and to provide the government with a price discovery mechanism to ensure accurate valuation of the Botswana rough diamonds sold through De Beers. 

With just under two years left before the end of the 2011 deal, and a new deal being drafted, it seems like the initial success of the “actual” beneficiation has waned. Manufacturers who closed shop over the past two years placed the blame on a number of factors, including lower productivity by Batswana cutters, and a lack of technological development within the country.

As it stands, the country does not have a fully flashed diamond school to train cutters and polishers who are needed by the firms that set up at the famous diamond park located in the capital Gaborone.

Molale admitted to a group of journalists in the capital Gaborone this week that, “diamond cutting and polishing firms were forced to train own staff which should be done by the government”.

Having recognised and admitted “lack of skills” amongst Batswana cutters and polishers, Molale says plans have been put forth to include diamond cutting and polishing at tertiary education. Going forward, the government is expected to stomach the costs of training diamond cutters and polishers.

Molale said the government has made a decision to pursue local value addition and beneficiation as key pillars of its economic revival and economic empowerment policy for the locals.

“Batswana must become active players in the diamond sector and by that I mean not just selling food or providing accommodation and transportation to the sector. We want them to be rich”.

Whilst the country seems to have emerged out of the conundrum created by a drop in the sale and prices of rough diamonds a few years back, pundits maintains that the government needs to put in place an appropriate industrial policy to address the imbalances bedevilling this infant industry. Until then, the beneficiation that was to come through the cutting and polishing industry remains in danger of becoming a pipe dream.

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