THE depressed diamond market will turn around only if Anglo American choses an “acceptable” buyer for De Beers and the only bidder exhibiting all the key requirements to be acceptable is the consortium led by former De Beers CEO, Gareth Penny.
That’s the view of Botswana Diamonds MD James Campbell who is now exploring for copper projects in Botswana because of the grim state of the diamond business.
Anglo American is currently carrying out a “structured sale process” to sell its 85% stake in De Beers and, amongst the bidders vying for outright control, are the governments of Botswana and Namibia.
According to Campbell, an acceptable buyer has to meet four key requirements. These are: a deep knowledge of the diamond industry; huge expertise in diamond marketing; deep financial pockets to be able fund the required expansions at the Jwaneng and Orapa mines and very strong relationships with African governments – in particular Namibia, Botswana, Angola and South Africa
“The consortium led by Gareth Penny is the only one of the known bidders that I believe meets all these requirements,” said Campbell.
Campbell singled out marketing as arguably the key issue in the demise of De Beers commenting, “20 years ago De Beers was worth $12bn. Now it’s worth around $3bn to $4bn. Why is that? I believe it is the result of the massive drop in advertising and marketing spend on diamonds by Anglo American.”
Campbell said the diamond business could turn around dramatically if a “statesman-like” leader such as Penny was appointed to run De Beers.
“This is a sentiment driven industry. Positive sentiment from renewed marketing and the right leadership can change things very quickly. Developments in the industry have shown this has happened several times in the past such as after Covid.”
Copper shift
Botswana Diamonds has now been awarded prospecting licences for copper covering some 7,000 square kilometres of ground in north-western Botswana which Campbell says has major potential for the discovery of polymetallic deposits.
Management has temporarily switched its focus to copper from diamonds because of the extreme difficulty in finding backers for its diamond projects.
Campbell commented: “You are looking at raising funds for exploration work at up to a 40% discount to your share price. We will not go below a 15% discount because that would not be fair to our shareholders.”
He added, “the mission of Botswana Diamonds was and still is, diamonds. But the market environment for diamonds is poor at present. This approach allows us to continue progressing the business as a mining company while remaining committed to diamonds over the longer-term.
“Interest has been shown by third parties in both our technology and in the results and we see clear potential to progress these licences efficiently through partnerships and structured exploration programmes.”
