We write in response to your recent article titled, ‘De Beers prices kill diamond industry’. We would like to highlight some factual inaccuracies and misperceptions in this article which, as a corporate citizen in Botswana, we feel are important to address.
The Government of The Republic of Botswana participates at a global level as a 15% shareholder in De Beers and the partnership therefore extends across all De Beers’ activities, rather than ending at DTCB.
The Botswana Government has two seats on the De Beers Board of Directors and so has direct involvement in De Beers’ business activities beyond specific joint ventures in Botswana such as Debswana and DTCB. It is important to note that there is no obligation whatsoever on any Sightholders (in Botswana or any other location) to purchase rough diamonds only from De Beers in order to retain their licences. As with all Sightholders, Botswana-based Sightholders are able to purchase rough diamonds from any source and there is absolutely nothing to prevent them from cutting and polishing these diamonds in Botswana. De Beers believes that for many Sightholders with beneficiation licences in Botswana, it is beneficial to purchase rough diamonds from sources other than De Beers and then cut and polish them in Botswana, so that they can use the economies of scale to bring down unit costs. In addition, it should be noted that De Beers plays no role whatsoever in the licensing of diamond cutting factories in Botswana – the licensing process is managed entirely independently by Government and the Diamond Hub.
De Beers does not hold a monopoly over the sales of diamonds in Botswana. While De Beers sells the majority of the rough diamonds mined via Debswana (the diamond mining joint venture with Government), currently 14% of Debswana availability by value (rising to 15% next year) is sold by the Government-owned Okavango Diamond Company. Furthermore, there are also producers other than Debswana that mine diamonds in Botswana. Businesses operating in Botswana are free to cut and polish diamonds purchased from anywhere around the world in their Botswana-based factories. Globally, De Beers’ share of rough diamond sales is around 35% so there are many other sources from which Botswana-based Sightholders can access supply for their Botswana factories.
Furthermore, while there have been some recent challenges in the diamond cutting and polishing sector, we are confident that opportunities still exist in the development of the cutting and polishing industry in Botswana, as evidenced by the setting up of operations in Gaborone by several new companies. All industrial sectors and individual businesses face periods or growth and contraction, but diamond industry analysts and commentators are in agreement that the medium and long-term opportunities for the diamond sector are very strong, as a result of global demand growth for diamond jewellery.
De Beers Head of Corporate Affairs - Botswana