DTC Moving to Botswana, 15% of Local Production Going to Gov‎'t

(IDEX Online News) – The long delayed agreement between De Beers and Botswana was signed Friday, leading to sweeping changes in the distribution of rough diamonds. Botswana will receive 10 percent of Debswana's production for independent sales. In addition, the Diamond Trading Company will relocate to Botswana.

There are several key components to the new agreement:

• Starting this year, ten percent of Debswana's run of mine will be sold to the Government of Botswana, and will not be aggregated with the rest of the goods sold to Sightholders. This supply will increase to 15 percent over a five-year period.

• DTC's team and operations will move to Gaborone, Botswana by the end of 2013.

• The London Sights will move from London to Gaborone and starting in 2014, Sightholders will need to travel to Botswana for their Sights.

• The ten-year contract is double the previous five-year contracts signed in the past.

More than anything, the new contract reflects the desire of Botswana to develop a diamond hub. The steps already made by De Beers – the set up of DTC Botswana with local Sights, the help in creating local manufacturing as well as plans move the aggregation to Gaborone – were precursors for the current move.

Further, the direct supply of so much of De Beers' production to the Government of Botswana is a further step away from De Beers' past policy of mining and buying as much as possible of the world's rough diamonds and selling them centrally to a short list of handpicked clients.

Even before the agreement was announced, DTC started a consultation process with employees over the move to Gaborone. The move is planned to include the entire Sights and sales operations - including professionals, skills, equipment and technology - from London to Gaborone by the end of 2013. From its new base in Botswana, the DTC will aggregate production from De Beers’ mines, and its joint venture operations worldwide, and sell to international Sightholders.

DTC CEO Varda Shine told IDEX Online that the long-term agreement ensures a steady supply of goods for the company and its clients.

Botswana has diamond reserves that will last a few more decades and wants to leverage it as much as possible. To do so, it is forming the diamond hub, which will offer goods, manufacturing and possibly jewelry manufacturing too.

The government hopes that Sightholders coming to Gaborone every five weeks for the Sights will also establish local operations in Botswana.

“This agreement, and the tangible outcomes it will deliver, will enable Botswana to achieve its aspiration to be a major diamond centre engaged in all aspects of the diamond business," according to Dr. Ponatshego Kedikilwe Botswana's Minister of Minerals, Energy and Water Resources.

Botswana holds 15 percent of De Beers and 50 percent of the De Beers subsidiary Debswana.

“The transformation that this agreement sets out is testament to our belief in the future of Botswana, and is a clear acknowledgment that De Beers’ success is only possible with a profound understanding that the aspirations of our partners must be at the core of our business," said Nicky Oppenheimer, Chairman of De Beers.