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Botswana ups pressure on De Beers Posted: Thu, 24 Jul 2008 [miningmx.com] --THE Botswana government is stepping up pressure on diamond giant, De Beers, regarding the continued local marketing and beneficiation of diamonds mined in the country. That’s despite major concessions made by De Beers over the past two years during which it agreed to the aggregation of its entire international diamond production in the Botswana capital - Gaborone. The latest development is that the Botswana government wants diamonds from the proposed AK6 mine – being developed by De Beers and AIM-listed junior African Diamonds – to be auctioned in Gaborone as part of the conditions required for the granting of a mining licence. The reason is that the Botswana government wants to develop a separate marketing process outside of the De Beers system. That’s despite the fact that the Botwana government is already heavily involved in the De Beers marketing process through a joint venture with De Beers marketing arm – the Diamond Trading Company (DTC). African Diamonds MD James Campbell today told delegates at the Botswana Resource Sector conference that African Diamonds was happy to accept the conditions for the AK6 mining licence but De Beers was not. As a result African Diamonds had declared a dispute with De Beers in terms of the shareholders’ agreement and had offered to buy-out De Beers majority stake the AK6 mine. The dispute process in the shareholders agreement includes arbitration to be held in Gaborone. Campbell said De Beers had proposed that development of AK6 should be delayed because it believed the project was compromised by “power supply issues.” “Despite claiming non-viability on AK6, De Beers is not prepared to accept a generous offer which more than covers their expenditure to date," he said. "We think the best thing for AK6 is that African Diamonds develops it under the conditions laid down by the Government and that we get on with the job as soon as possible.” The background to this latest development involves Botswana’s desire to shift from being a diamond producing nation to a diamond marketing nation before its diamond mining industry winds down. According to economic consultant Keith Jefferis, who presented on the first day of the conference, Botswana has just “ten good years” left in which to maximise revenues from its diamond mining sector and use this time to diversify its economy into other sectors. Diamond earnings are expected to peak in 2018 and then decline sharply as the existing major opencast mines are forced to go underground which will reduce production volumes and raise operating costs. According to Jefferis, the country’s diamond producing sector will be “exhausted” by 2030. The government has appointed Akolang Tombale – the highly respected former permanent secretary in the department of minerals, energy and water resources – to be the co-ordinator of Botswana’s proposed “Diamond Hub.” Tombale told delegates at the conference this morning that the Botswana government was intent on implementing a strategy decided on in 2002 that the country should shift from being a diamond producer to a world diamond centre. One specific target was to increase the value of diamonds cut and polished in Botswana from $30m in 2004 to $550m by 2010 at which point the government would review progress on its strategy. Tombale told delegates he hoped that, in future, De Beers would no longer sell its diamonds at the traditional sights in London but instead sell them in Gaborone where the group now aggregates its total production. Interviewed after his talk, Tombale told Miningmx that such a move was under discussion between the Botswana government and De Beers. Tombale added the government was keen to create a trading facility outside the De Beers system which would market diamonds to be mined by the various independent diamond companies developing new mines in Botswana. The requirement that AK6 auction its production in the country is part of this process. Tombale said the government wanted the separate trading process to increase the volume of business done in the country and also to compare prices achieved against the De Beers marketing system. Click Here to subscribe to our daily
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