Saturday, February 27, 2021

UDC vows to end De Beers’ dominance

Former cabinet minister David Magang’s book, The Magic of Perseverance, paints De Beers as a formidable foe that needs to be cut down to size. The same sentiments were expressed by the Umbrella for Democratic Change (UDC), who, in their manifesto for the 2014 general elections, vowed to tame this Goliath.

“De Beers is … currently undertaking the valuing, aggregation and sales process, a process shrouded in relative secrecy. This means, despite many years of diamond mining, the Botswana government and Botswana citizens remain alien to some of the high value activities within the diamond sector,” reads the party’s manifesto which was launched last Friday in Gaborone.

The party says that as a shareholder in Debswana Diamond Company, the Botswana government needs to put a more rigorous regime on diamond value management, including process efficiencies and diamond security. While Debswana is a joint venture between the government and De Beers, the latter is widely viewed as the more dominant partner. Once that regime is in place, the UDC government will agitate for the Jwaneng mine to house a large diamond recovery process, which plan De Beers has been resisting.

“Botswana’s flagship mine, the Jwaneng Diamond Mine, mines large diamonds which are currently being broken because of process configuration. It is known that large diamonds could carry higher value, such as is the case at Karowe Mine and Letseng Mine in Lesotho. The time is overdue for Jwaneng to house a large diamond recovery process, which De Beers has over the years not agreed to. This transition should allow Jwaneng Mine or Botswana to produce some of the largest high value diamonds in the world,” UDC says in its manifesto.

For the most part, the Botswana government and De Beers have marched in lockstep in the exploration of diamonds but that could change with a UDC government. The manifesto suggests that in instances where De Beers is not too keen on some venture, a future UDC government would be less accommodating than the current one.

“Our mines also process but do not recover fine diamonds based on the stand-point that these fine diamonds could dilute the value per carat. This is not convincing. Argile mine in Australia is mining and recovering fine diamonds, as is Russia, of down to 1 mm or even 0.5mm to the tune of 35 million carats. The market for these is large especially in India where they have fine-tuned their polishing skills for these small stones. If De Beers is not interested, the UDC government would seek other partners to exploit this opportunity.”

The party also takes the view that the commercial value of tailings (refuse remaining after ore has been processed) is underexploited. By way of example, the manifesto says that the value of the Jwaneng tailings is about 20 percent of the original head grade – that being the average grade of ore fed into a mill.

“The new government will insist, as a shareholder, on the re-mining of these dumps, without any need for investigations or studies, and seek a time-frame for the mining of these dumps, as well as their expected value,” the manifesto says.

A future UDC government would also clash with De Beers over water. Presently, Jwaneng Mine has access to a bountiful supply of water at Magagarapa which is 50 kilometres away. The manifesto says that the UDC would ensure that this water is shared. The party says that it would also ensure that large quantities of water demanded in the future for coal mining and industrial development are sustainably provided and in the event the country runs out of water, it would be imported from Lesotho. The manifesto says that these initiatives would be financed “partly through a new tariff system in which mines utilising groundwater are charged for use of such water resources.”

In his book, “The Magic of Perseverance”, Magang, a former cabinet minister who at one point was responsible for mining, characterises De Beers as a force so malevolent that it has absolutely no compunction about resorting to outright criminality to get what it wants.

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