25 Nov 2013

Players in the creative industry should start marketing and advertising Gaborone as a diamond centre as its time as just an ordinary African city lapses.

Permanent Secretary to the President (PSP), Mr Eric Molale, said in an interview that the massive relocation of the De Beers Global Sightholder Sales (DBGSS) from London to Botswana was demonstration enough that diamonds were here to stay.

“This relocation must also be harmonised with positive marketing issues such as our pristine Okavango Delta so as to attract as much revenue as possible,” Mr Molale who was also chief government negotiator during the pre-relocation talks added.

Since mining started in Botswana, government and De Beers have had several diamond sales agreements with a five-year lifespan.

“During our negotiations in 2011 we allowed it to be a ten-year interval because of the magnitude of the conditions involved in this particular agreement,” he said. Previous agreements had given De Beers the monopoly of marketing and selling diamonds through its sales wing, Diamond Trading Company International (DTCI).

“We needed to see downstream activities here and negotiations started in 2009 until an agreement was sealed two years later,” noted Dr Athalia Molokomme, Attorney General in a separate interview. When negotiations started, Dr Molokomme said, each party had its peculiar wish list which ended in a “fantastic trade off.”Thus, Mr Molale said government insisted that De Beers must relocate its London based sales wing to Gaborone for further beneficiation and spin offs in the local economy.

“We are mining the resource here, so most of the functions should be done here at home,” he emphasised. To which the Attorney General said that position was a “really big ask” for De Beers, having to relocate from London, a highly competitive commercial global metropolis. But De Beers also had its own tough demands, chief among them a “Life of Mine” agreement that would see them selling Botswana diamonds for the entire lifespan of Debswana mines.

“We surely could not mortgage the country to that extent but as a result of a give and take process we settled for ten years moving from our initial five years,” Dr Molokomme added. Mr Molale added that government also wanted, and achieved, that Botswana should sell Debswana [an equal share mining joint venture between De Beers and Botswana] produce starting from 10 per cent gradually growing towards 15 per cent by the end of four years. Owing to such an agreement, Debswana had to increase the lifespan of its mines hence the ongoing Jwaneng Cut 8 project. As a result of the DBGSS move to Gaborone, Mr Molale said, economic value would soon be reaped from the sectors of property development, hospitality, transport, health, education and several other industries.
“We have to match what the diamond dealers used to enjoy in London that is why among others we are spending so much in easing communication through connecting fibre network to the West African Cable System (WACS),” he said. When that is said and done, he said, factories that process diamonds at various stages would then have no reason not to set up at the centre of production.
Issues of security, he said, have been addressed and were continually being monitored as it required a delicate balance between security and pursuing commercial interests.

The PSP said a special immigration handling facility has also been created at the Sir Seretse Khama Airport so that investors have easy access to the diamond. Throughout the negotiation process, said Dr Molokomme, government relied on the expertise of an experienced law firm Slaughter and May whose legal counsel to Botswana dated back ages. And in case a clash arose from the agreement, she said, a dispute resolution mechanism that had survived over the years was in place. “We resolve issues between ourselves before referring them to any third party and we both have done our best to avoid washing our dirty linen in public,” she said. ENDS