Botswana, De Beers diamond sales agreement kicksoff
It is only a matter of time before Eric Molale- Minister of Minerals, Energy Resources and Green Technology leads the Botswana team to negotiate a new sales agreement with government’s long-time partner, De Beers’ group of companies.
Molale is not new to the negotiating table of the sales agreement. He, together with the then minister of Minerals and Water Affairs Dr. Ponatshego Kedikilwe led a strong Botswana team as Permanent Secretary to the President (PSP) and Chairman of Debswana in negotiating the current ten year agreement signed in 1st January 2011.
Debswana is a 50-50 joint venture between government and De Beers. Anglo American owns 85 percent of De Beers and the remaining is held by Botswana’s government.
Molale assembled a strong team comprising the then Attorney General Athalia Molokomme, Bank of Botswana Governor Linah Mohohlo, then Permanent Secretary in the ministry of minerals, Boikobo Paya and his deputy Terrence Siamisang. He also roped in Dr. Akolang Tombale and Gabaake Gabaake. The presence of Tombale caused a furore as incumbent De Beers’ CEO, Nicky Oppenheimer and the then De Beers’s legal advisor allegedly opposed his presence, but these attempts were met with equal contempt. The two were reminded that they have no right to determine who has to constitute the Botswana team.
The Botswana team worked as a united force and used to meet on their own to determine the way forward as well as decide who amongst them would present a particular issue and that nominated person would enjoy the support from colleagues.
The result of the negotiations brought along the best ever terms for Botswana in an agreement that comes to an end in 2010. The practice is that negotiations start in advance in order to avoid any gaps.
The contract covered sorting, valuing and sales of Debswana’s diamond production.
It was also agreed that De Beers will transfer its London-based rough diamond sales activity to Gaborone, underpinning the long-term future of the partnership and transforming Botswana into one of the world’s leading diamond trading and manufacturing hubs.
Over and above that, it will see the Diamond Trading Company (DTC) relocate its sights and sales operations - including professionals, skills, equipment and technology - from London to Gaborone by the end of 2013, all of which have come to pass.
DTC has since constructed a landmark in Gaborone along the Airport Road. DTC does not only aggregate production from all De Beers’ mines and its joint venture operations worldwide, and sell to international Sight holders, but houses one of the best and latest diamonds sorting equipment in the whole world. To date DTCB continue to sort and value Debswana’s production before selling, it also supports the domestic cutting and polishing industry.
Okavango
The current agreement led to Botswana Government having its own independent sales outlet which takes 15 percent of the total Debswana diamond and sells them to whoever it deems fit. The deal started with 10 percent of Debswana production and was to increase over a five year period.
Negotiations
Although a date for the negotiations has not been announced, there is no doubt that they will take place as President Mokgweetsi Eric Masisi has already indicated that he wants a new long-term diamond-sales pact with De Beers when the current 10-year deal expires in 2020 and for more gems to be processed locally. Speaking to Bloomberg, Masisi said the conclusion of an accord is crucial for both Botswana, which relies on diamonds for almost a fifth of its gross domestic product, and for the Anglo American Plc unit that gets about two-thirds of its gems from the southern African nation. Masisi, who is due to contest elections next year, is pushing for the industry to create more jobs and is “dead determined” that more diamonds be cut and polished in the country.
“We have had a wonderful relationship with De Beers and we expect that relationship to be even more cemented,” Masisi said in an interview Monday in his office in Gaborone.
“There is a way of actually achieving a win-win for both, and that’s what we desire.” It remains to be seen whom Molale will pick in his negotiating team this time around besides the obvious picks like the Attorney General Abraham Keetshabe, BoB Governor Moses Dinekere Pelaelo and Permanent Secretary at Minerals, Energy Resources and Green Technology Cornelius Diekop.
