Indian mining tycoon Anil Agarwal has waltzed to the top table in the world of mining after recently increasing his stake to 20% in Anglo American Plc and thus becoming the largest shareholder in the mining behemoth. This move has send shivers down spines of many, among them Botswana. It is still a mystery what the diamantaire intends to do with his shareholding, but it is expected that he would be eager to increase India's role in cutting and polishing industry. Taking into account initiatives by Botswana Government to develop downstream industries in the diamond value chain to enhance beneficiation efforts since the relocation of DTC to Gaborone, this pursuit could be halted. Below senior officials in the Ministry of Minerals respond to Patriot questions.
How is the change in shareholding likely to affect Botswana’s plans?
A: The agreement we have is with Anglo holding, which has 85% stake and Government of Botswana 15%. As far as we are concerned this status quo remains. Therefore Botswana’s plans are not going to be affected since nothing has changed regarding our shareholding in De Beers.
What is the status of beneficiation efforts in the diamond industry? Have we developed any downstream businesses?
A: Beneficiation of diamonds (i.e. mainly cutting and polishing) is progressing well but there are some challenges. On the positive side, diamond factories increased from 16 to 20 in 2012. We have seen growth in the value of diamonds polished locally. On the flip side, diamond factories have raised concerns about low productivity levels in Botswana due to fewer working days (256 days) compared to developed manufacturing centres like India and China. Also the manufacturing costs in Botswana are higher than in India and China. Since 2015, over 1500 people have been laid off work by factories as a result of squeezed profit margins owing to a decline in polished diamond prices.
Should Agarwal strengthen cutting and polishing in India could this collapse efforts to grow the industry in Botswana?
A: India has long been an established cutting and polishing centre even before Botswana began diamond beneficiation in earnest in 2008. Botswana is pursuing its own aims to become a polishing centre and so far we have done well despite competing with India and other manufacturing centres. We cannot tell if such a move will collapse our efforts in Botswana.
What options are available to Botswana in this change of shareholding?
A: We cannot tell at this point in time.
Kindly share any valuable information that may be useful in understanding the relationship between Botswana and De Beers in the diamond market
A: Our partnership with De Beers continues to achieve milestones in as far as diamond mining is concerned. Some of the milestones are the i) relocation of diamond aggregation and sales to Gaborone which happened in November 2013. ii) Cut 8 mine expansion project at Jwaneng Mine which started producing ore this year iii) hosting the Diamond Conference together which will be entering its third year this year.
We kindly request a comment from Government of Botswana (Ministry of Minerals) regarding developments in South Africa, where last month government that side refused to grant an exemption to De Beers Consolidated Mines (DBCM) relating to the exportation of diamonds to Botswana for aggregation ahead of their Sight. What measures has the government of Botswana undertaken to intervene in the standoff?
A: None. We believe that the two parties will be able to resolve the issue
Should SA continue to refuse to allow exportation of their diamonds to Botswana, How is this going to affect business at DTCB and De Beers Group of Companies business in Botswana?
A: For now we cannot say how it is going to affect business.
What is the value of diamonds imported from SA for aggregation at DTCB at each Sight?
A: It is usually USD 0.5million per sight
How many Sight-holders are currently operating in Botswana?
A: We currently have 20 sight-holders operating in Botswana and they are employing approximately 2200 citizens.