This week, diamantaires converged in Botswana’s capital Gaborone – a world diamond city following the relocation of the Diamond Trading Company to the city. About 10 times in a year, buyers of diamonds – sightholders - from all over the world arrive in the city to purchase diamonds from De Beers Group Sightholders and head back with their consignments for further sorting and polishing. While a number of them are located outside Botswana, a sizeable number of De Beers’ sightholders have set base in Botswana, though some have left in recent years as the industry faced headwinds. Currently there are 20 diamond cutting and polishing companies operating in Botswana. It is no surprise that key diamond conferences are held in Gaborone as it is the world’s diamond hub. This year’s diamond conference held under the theme, “Beyond tomorrow – preparing the diamond sector for the future” focused on how the industry should be innovative to withstand the challenges faced by the sector.
At the two day event, it emerged that the diamond industry is facing a plethora of challenges and key among them is access to financing which has drastically reduced over time as volatility in the industry grew. De Beers’ new CEO, Bruce Cleaver - who assumed the position in July this year – highlighted the challenge when he gave the welcoming remarks on Tuesday morning at Gaborone International Convention Centre (GICC). Cleaver, who replaced Philippe Mellier who himself stepped down after being accused of failing De Beers and the industry as a whole, said there is a need for financing, particularly in the midstream where it has been reduced in recent times. The other challenge that the diamond industry is faced with, according to Cleaver, is sustainability which has seen consumer trends changing in the recent past. But Cleaver acknowledged the opportunities in the industry which he said is built on partnerships.
When delivering a keynote address, Vice President Mokgweetsi Masisi said the challenges faced by the diamond industry are not only unique to Botswana. He said currently the industry is grappling with disruptive technologies such as those that are targeted at creation of synthetic diamonds. In the face of those challenges, Masisi urged the diamond companies across the value chain to be innovative and strategic. “Some of the problems cited by the local industry are limited access to credit facilities as historic financiers of the diamond industry have pulled out citing high production costs and unavailability of skills,” Masisi said. Masisi said the government is committed to providing a conducive environment for diamond trading in Botswana. “Let me assure you, going forward into tomorrow the future that your investments in the diamond sector, particularly in Botswana are and will be as safe as can be,” he said.
For his part, Nonofo Molefhi – who opened the conference on behalf of the Minister of Minerals, Green Technology and Energy Security, Sadique Kebonang – said the industry should invest in infrastructure, more especially in the capital Gaborone, as the ambition is to make the city a diamond hub. He said the mining companies should also strive to develop the communities in which they operate and contribute to sustainable economy. The Botswana diamond cutting industry got a boost this year when the Overseas Private Investment Corporation (OPIC) signed a $125 million guaranty with Barclays Bank Botswana which will help Botswana develop its industry in a suitable manner that will promote job creation and economic diversification.
According to De Beers Insight Report for 2016, global economic growth will continue to be volatile, as businesses become more highly leveraged, markets become more interconnected, current account imbalances widen, foreign exchange fluctuates and geopolitical instability increases. The diamond industry is likely to experience increased volatility under any macroeconomic scenario, relative to recent years. Positive consumer demand growth is expected to continue coming from Asian consumers, particularly Chinese and Indian, driven by increasing household wealth over the next 10 years but at lower levels than previously assumed.