Botswana says Natural Diamond Recovery Need a Stable De Beers

(IDEX Online) - Botswana vice president Ndaba Gaolathe says the recovery of the natural diamond market depends to a large extent on a stable relationship between his country and De Beers, in which it currently holds a 15% stake.

He also said uncertainty over the partnership between his government and the diamond miner helped give lab growns an opening.

Speaking at Chatham House, the London-based international affairs think tank, on September 17, Gaolathe said Botswana and De Beers had historically acted together during diamond downturns, including by stockpiling rough diamonds and investing in category marketing.

"The market understood there was this relationship which was prepared to do anything under the sun to ensure that the diamond continues to be resilient," he said.

Gaolathe, who is also Botswana's minister of finance, said questions about the future of the partnership had created uncertainty in the natural diamond market.

He acknowledged that geopolitics, tariffs and other factors had also affected demand, but argued that uncertainty around the Botswana-De Beers relationship had weakened confidence in the category and created an opportunity for lab grown diamonds to gain market share.

His comments come as Anglo American seeks to sell its 85% stake in De Beers. Botswana has indicated that it wants a larger role in the company.

Gaolathe said, however, that Botswana's ambitions extend beyond simply increasing its ownership. After decades in the industry, he said the country had developed expertise throughout the diamond value chain.

"Botwana has been in the diamond sector for decades now. It has learned the art at every level," he said. "In life you graduate, you go to the next level. So the idea here is Botswana also needs to go to the next level."

He said any investment in De Beers would be approached cautiously, rejecting the suggestion that Botswana would jeopardize its financial position to increase its stake.

"The issue is not whether Botswana has the funding," he said. "The issue is whatever partnership that Botswana conjures, is it the type of partnership that has the strategic superiority to take the diamond sector to the next level."

Gaolathe's wider message at Chatham House was that Botswana needs to reduce its dependence on diamonds, even while seeking to strengthen the value it derives from them.

"We have no choice to diversify or we perish," he said.

He identified mineral beneficiation, manufacturing, energy, financial services, agriculture and tourism as areas for future growth. At the same time, he said diamonds would remain important to Botswana.

"Diamonds can remain part of Botswana's future without remaining the sole architect" of that future, he said.

Pic shows Botswana vice president Ndaba Gaolathe speaking in London.