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De Beers kicks off “diamonds from DTC” provenance claim

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.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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