De Beers kicks off diamonds from DTC provenance claim
Business
This week De Beers announced that diamonds which will be purchased from the current Sight of 2019 which is the third and runs from April 1 to 5, and onwards, where customers can refer to stones purchased from the giant mining company as “diamonds from DTC” across the value chain down to the end-consumer level.
According to De Beers, Sightholders and Accredited Buyers will be able to use the “diamonds from DTC” provenance claim across the value chain down to the consumer level, and will be able to provide assurance on its validity through certifying the claim under the Responsible Jewellery Council standards, or through an independent third-party audit. The “diamonds from DTC” provenance claim will add glitter to the ever sparkling Botswana’s diamond-led development story. Diamonds from Botswana contribute to 27 percent or US$ 4.4 billion of the GDP.
In Botswana De Beers has four companies in diamond business; De Beers Holdings, Debswana, Diamond Trading Company Botswana and De Beers Global Sightholder Sales. De Beers Holdings is the exploration arm and is currently focused on early stage exploration programmes in Tsabong, Orapa, Palapye and Kang. Debswana, a 50/50 joint venture between De Beers and the Government, is the primary producer of diamonds in Botswana.
The Diamond Trading Company Botswana, also a 50/50 joint venture between De Beers and the Government, sorts and values the rough diamonds mined by Debswana. De Beers Global Sightholder Sales is responsible for selling the bulk of De Beers’ global production to its rough diamond customers, known as Sightholders. In 2013, De Beers moved this international sales operation from London to Gaborone, resulting in growth in the volume of diamonds traded in Botswana to about US$6 billion, leading to a boost to employment, as well as downstream and other support services.
“We are proud of where our diamonds are discovered, how we recover them responsibly and the role our activities play in building thriving communities. By enabling our customers to share the source of origin of our diamonds, we hope to drive further transparency throughout the diamond value chain,” said De Beers Group CEO Bruce Cleaver this week.
According to De Beers, the “diamonds from DTC” provenance claim will offer greater significance than many other industry provenance claims, as it not only states corporate provenance, but is also supported by the provision of sustainability performance and transparency information on each of the mines of origin
Diamonds from DTC Botswana journey
Exploration of diamonds is done entirely by De Beers. Mining or production is done at Debswana, a 50/50 joint venture between De Beers and the Government, which owns mines: Jwaneng, Letlhakane, Orapa and Damtshaa. Thirteen percent of Debswana production is made available by Okavango Diamond Company, a rough diamond distribution entity which is 100 percent owned by Botswana government. Most of the Botswana diamonds are transferred to De Beers Global Sightholders Sales.
De Beers Global Sightholders Sales sells around 90 per cent of De Beers’ rough diamonds by value, via term contracts to customers known as Sightholders, at events called Sights. Rough diamonds from these mines will then be sorted and valued by the Diamond Trading Company Botswana (DTC Botswana) another 50/50 Joint Venture partnership between the Government of the Republic of Botswana and De Beers.After being valued and sorted by DTC Botswana, rough diamonds will then be sold to Sightholders or Accredited Buyers-these are a select group of clients which are certified by De Beers to be demonstrating high financial integrity and sufficient demand for rough diamonds.
In Botswana there are 20 Sightholders who have established cutting and polishing diamonds in Gaborone. De Beers sell rough diamonds through ‘Sights’ to these Sightholders or Accredited Buyers. Rough diamonds can also be sold via online auction sales. Sights which comes after every five weeks and last up for a week, the coming one slated for April 1 to 5(third one of this year), are held 10 times a year in Botswana (and Namibia and South Africa), where customers will inspect their rough diamond allocations before deciding whether to purchase them. Diamonds will then be cut and polished by diamentaires before being sold to jewelers and other retailers around the world.
Skepticism dresses the 3rd Sight
Towards the current Sight which ran this week, diamond experts around the world expected rough diamond prices to drop to drop 1 percent to 2 percent in the first half of 2019. These analysts also expected the prices to recover then end 2019 flat. London based analyst Kieron Hodgson told diamond publisher Rapaport that prices rose to 2 percent last year due to a strong first half, but the market slowed in the second half. According to Hodgson, production rose over the last two years and this led to supply outweighing demand especially in smaller categories.
According to Rapaport Weekly Market Comment, sentiment weakens after soft first quarter and dealers are avoiding large inventory purchases, and manufacturers on the other hand are reducing supply. The publication says miners are bracing for tough year as first-quarter sales decline an estimated 30 percent “Rough market under pressure, with some analysts optimistically predicting flat rough prices in 2019. Sightholders hoping profit margins will improve after next week’s sight,” says the comment.
Jewelers International Showcase
As a biggest diamond producing country backed by De Beers which is a big player in the industry, Botswana diamonds end products are expected to be among ones to be exhibited at the Jewelers International Showcase(JIS)-the second largest jewelry show in the Wstern Hemisphere. The JIS is slated for April 16-18 at the Miami Beach Convention Centre in the state of Florida, USA.
The Surat trade mission
Many diamantaries are expected to converge at the Indian city of Surat where they will be provided with an unprecedented opportunity for members of the diamond and jewelry trade to meet and interact with the diamond cutters, dealers and market makers in the world’s largest diamond cutting center. Surat is home to an estimated 500,000 diamond cutters, who manufacture over 90 percent of the world’s polished diamonds. The trip to Surat will be on April 8 to 11.
Business
Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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