Canadian based Lucara Diamond Corporation earlier this week announced the successful sale of the historic 1,109 carat diamond, Lesedi La Rona for US$53 million to a London based British multinational jeweller.
The lucrative stone is the third-largest diamond ever found and was recovered from Karowe mine in Letlhakane in the Boteti District of Botswana in November 2015. Only the non-gem black Sergio and the gem-quality Cullinan are larger.
Reports from Lucara reveal that Lesedi La Rona was priced at US$47,777 per carat hence the US$53 million tag price which is equivalent to approximately over BWP 500 million. Laurence Graff of Graff Diamond was quoted by media reports as saying that his company was thrilled and honoured to become the new custodians of the stone. “The stone will tell us its story, it will dictate how it wants to be cut, and we will take the utmost care to respect its exceptional properties, this is a momentous day in my career, and I am privileged to be given the opportunity to honour the magnificent natural beauty of the Lesedi La Rona.”
President and Chief Executive of Lucara Diamonds, William Lamb observed that the discovery of the Lesedi La Rona was a company defining event. “It solidified the amazing potential and rareness of the diamonds recovered at the Karowe mine,” he said adding that his company took time to find a buyer who would take the diamond through its next stage of evolution.
After discovery the exact value of the Lesedi Larona could not be determined until it was decided how it will be cut and more details about its colour were known. Former diamond-mining geologist Phil Swinfen estimated based on other previous similar sales that the stone could be sold for $40–60 million adding that the process of selling and cutting the diamond would likely take years to complete. In May 2016, Sotheby’s announced in London that the Lesedi La Rona diamond would be offered in a stand-alone auction on 29 June 2016.
It was expected to sell for around $70 million. After closer examination, the diamond was presented at the auction as weighing 1,109 carats. At the public auction at Sotheby's on 29 June 2016, the highest bid for the diamond was $61 million. However, this bid fell short of the undisclosed reserve price and the stone was not sold. The bidding opened at $50 million and the auction lasted for less than 15 minutes.
Lukas Lundin, whose family is Lucara Diamond’s largest shareholder, noted that the commission arrangement with Sotheby’s meant the stone would have had to reach $150 million for the auctioneer to make a large profit. At the time, David Bennett of Sotheby’s had revealed it was the first time the company held an exclusive auction for one single object. It was preceded by the sale of three smaller rough diamonds. The stones were also from Lucara and the proceeds, $140,000, were donated to charity. The Constellation had been found the day after the Lesedi La Rona in the same section of the mine.
Lamb has exclaimed that the price paid was also an improvement on the highest bid received at the Sotheby’s auction in June 2016. He further noted that t Graff Diamonds is now the owner of the Lesedi La Rona as well as the 373 carat diamond, purchased earlier this year, which formed part of the original stone. “We are excited to follow these diamonds through the next stage of their journey,” Lamb was quoted as saying.
The Lesedi La Rona is a colourless/white type IIa diamond. It weighs 1,111 carats (222.2 g; 7.84 oz) and measures 65 mm × 56 mm × 40 mm (2.6 in × 2.2 in × 1.6 in). In comparison, the Cullinan, discovered in 1905 in South Africa, weighed 3,106.75 carats (621.350 g). The Lesedi La Rona was mined using Large Diamond Recovery ("LDR") XRT machines, and is the largest diamond recovered using machines for automated diamond sorting.
It is estimated to be over 2.5 billion years old. In the months after its discovery the diamond was exhibited in a world tour in Singapore, Hong Kong, New York, and Antwerp, Belgium, a major centre of the world diamond trade.
THE PROPOSED AMENDMENTS TO PRECIOUS STONES TRADE
The Diamond Industry is Botswana‘s largest economic sector contributing over 30 % to the country‘s GDP alone. Botswana is currently proposing an amendment to the Botswana Precious and Semi Precious Stones (Protection) Act, regarding the Botswana Government's right to purchase diamonds that are unusually large or have unusual features at market prices. If amended, the government will have the first option to buy ‘unusual’ diamond finds such as the historic Lesedi La Rona.
A recently filed draft bill to amend the Precious and Semi-Precious Stones Act contains a new clause that compels any producer that comes into possession of an unusual rough or uncut diamond to notify the minister of mines within 30 days, following which the government shall have the right of first refusal to the stone. “The price to be paid by government for a rough or uncut precious stone offered for sale by the producer shall be agreed between the parties in accordance with the current market price of the rough or uncut precious stone,” the bill states. The bill did not give a precise definition of “unusual”.
This move by Botswana is the latest in a series of similar measures by African countries such as Lesotho, Tanzania and Zimbabwe to exert tighter control on their mineral resources. With regards to this Chief minerals officer in the Ministry of Mineral Resources, Green Technology and Energy Security, Moses Tshetlhane said that amendment of the law was motivated by recovery of some unusually large diamonds, namely: the Lesedi La Rona and Constellation.
Some of the amendments to the Act include stiffer penalties for illegal trade of diamonds, as well as false declarations of discovery of precious stones. Producers that make false declarations about the place they would have discovered a precious stone should also be liable to penalties prescribed by law for a crime of perjury, and all rights acquired by them in consequence of any such declaration shall lapse.
“Some of the key changes to the Act are to remove trade barriers and increase penalties to deter any potential illegal trade as well as improve facilitation in the sorting, valuing, aggregation and selling of rough diamonds. The Precious and Semi-Precious Stones Act is being amended to ensure that it stays relevant and applicable to the prevailing and ever changing environment in the diamond industry,” shared the Chief Minerals Officer.
FaR Property Company (FPC) Limited, a property investment company listed on the Botswana Stock Exchange, has recently announced its exceptional financial results for the year 2023. The company’s property asset value has risen to P1.47 billion, up from P1.42 billion in the previous year.
FPC has a diverse portfolio of properties, including retail, commercial, industrial, and residential properties in Botswana, South Africa, and Zambia. The company owns a total of 186 properties, generating rental revenues from various sectors. In 2023, the company recorded rental revenues of P11 million from residential properties, P62 million from industrial properties, and P89 million from commercial properties. Overall, the company’s total revenues increased by 9% to P153 million, while profit before tax increased by 22% to P136 million, and operating profit increased by 11% to P139 million.
One notable achievement for FPC is the low vacancy rate across its properties, which stands at only 6%. This is particularly impressive considering the challenging trading environment. The company attributes this success to effective lease management and the leasing of previously vacant properties in South Africa. FPC’s management expressed satisfaction with the results, highlighting the resilience of the company in the face of ongoing macroeconomic challenges.
The increase in profit before tax can be attributed to both an increase in income and effective control of operating expenses. FPC managed to achieve these results with fewer employees, demonstrating the company’s efficiency. The headline earnings per linked unit also saw an improvement, reaching 26.92 thebe, higher than the previous year.
Looking ahead, FPC remains confident in its competitiveness and growth prospects. The company possesses a substantial land bank, which it plans to develop strategically as opportunities arise. FPC aims for managed growth, focusing on consumer-driven developments and ensuring the presence of supportive tenants. By maintaining this approach, the company believes it can sustainably grow its property portfolio and remain competitive in the market.
In terms of the macroeconomic environment, FPC noted that inflation rates are decreasing towards the 3% to 6% range approved by the Bank of Botswana. This is positive news for the company, as it hopes for further decreases in interest rates. However, the fluctuating fuel prices, influenced by global events such as the war in Ukraine and oil output reductions by Russia and other Middle Eastern countries, continue to impact businesses, including some of FPC’s tenants.
FPC’s property portfolio includes notable assets such as a shopping mall in Francistown with Choppies Hyper as the anchor tenant, Borogo Mall located on the A33 main road near the Kazungula ferry crossing, and various industrial and commercial properties in Gaborone leased to Choppies, Senn Foods, and Clover Botswana. The company also owns a shopping mall in Mafikeng and Rustenburg in South Africa.
The majority of FPC’s properties, 85%, are located in Botswana, followed by 12% in South Africa and 3% in Zambia. With its strong financial performance, competitive position, and strategic land bank, FPC is well-positioned for continued growth and success in the property market.
The Botswana Power Corporation (BPC) has taken a significant step towards diversifying its energy mix by signing a power purchase agreement with Sekaname Energy for the production of power from coal bed methane in Mmashoro village. This agreement marks a major milestone for the energy sector in Botswana as the country transitions from a coal-fired power generation system to a new energy mix comprising coal, gas, solar, and wind.
The CEO of BPC, David Kgoboko, explained that the Power Purchase Agreement is for a 6MW coal bed methane proof of concept project to be developed around Mmashoro village. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy in the energy mix. The use of coal bed methane for power generation is an exciting development as it provides a hybrid solution with non-dispatchable sources of generation like solar PV. Without flexible base-load generation, the deployment of non-dispatchable solar PV generation would be limited.
Kgoboko emphasized that BPC is committed to enabling the development of a gas supply industry in Botswana. Sekaname Energy, along with other players in the coal bed methane exploration business, is a key and strategic partner for BPC. The successful development of a gas supply industry will enable the realization of a secure and sustainable energy mix for the country.
The Minister of Minerals & Energy, Lefoko Moagi, expressed his support for the initiative by the private sector to develop a gas industry in Botswana. The country has abundant coal reserves, and the government fully supports the commercial extraction of coal bed methane gas for power generation. The government guarantees that BPC will purchase the generated electricity at reasonable tariffs, providing cash flow to the developers and enabling them to raise equity and debt funding for gas extraction development.
Moagi highlighted the benefits of developing a gas supply industry, including diversified primary energy sources, economic diversification, import substitution, and employment creation. He commended Sekaname Energy for undertaking a pilot project to prove the commercial viability of extracting coal bed methane for power generation. If successful, this initiative would unlock the potential of a gas production industry in Botswana.
Sekaname Energy CEO, Peter Mmusi, emphasized the multiple uses of natural gas and its potential to uplift Botswana’s economy. In addition to power generation, natural gas can be used for gas-to-liquids, compressed natural gas, and fertilizer production. Mmusi revealed that Sekaname has already invested $57 million in exploration and infrastructure throughout its resource area. The company plans to spend another $10-15 million for the initial 6MW project and aims to invest over $500 million in the future for a 90MW power plant. Sekaname’s goal is to assist BPC in becoming a net exporter of power within the region and to contribute to Botswana’s transition to cleaner energy production.
In conclusion, the power purchase agreement between BPC and Sekaname Energy for the production of power from coal bed methane in Mmashoro village is a significant step towards diversifying Botswana’s energy mix. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy. The government’s support for the development of a gas supply industry and the commercial extraction of coal bed methane will bring numerous benefits to the country, including economic diversification, import substitution, and employment creation. With the potential to become a net exporter of power and a cleaner energy producer, Botswana is poised to make significant strides in its energy sector.
It is not clear as to when, but before taking a festive break in few weeks’ time UDC leaders would have convened to address the ongoing deadlock surrounding constituency allocation in the negotiations for the 2024 elections. The leaders, Duma Boko of the UDC, Mephato Reggie Reatile of the BPF, and Ndaba Gaolathe of the AP, are expected to meet and discuss critical matters and engage in dialogue regarding the contested constituencies.
The negotiations hit a stalemate when it came to allocating constituencies, prompting the need for the leaders to intervene. Representatives from the UDC, AP, and BPF were tasked with negotiating the allocation, with Dr. Patrick Molotsi and Dr. Philip Bulawa representing the UDC, and Dr. Phenyo Butale and Wynter Mmolotsi representing the AP.
The leaders’ meeting is crucial in resolving the contentious issue of constituency allocation, which has caused tension among UDC members and potential candidates for the 2024 elections. After reaching an agreement, the leaders will engage with the members of each constituency to gauge their opinions and ensure that the decisions made are favored by the rank and file. This approach aims to avoid unnecessary costs and conflicts during the general elections.
One of the main points of contention is the allocation of Molepolole South, which the BNF is adamant about obtaining. In the 2019 elections, the UDC was the runner-up in Molepolole South, securing the second position in seven out of eight wards. Other contested constituencies include Metsimotlhabe, Kgatleng East and West, Mmadinare, Francistown East, Shashe West, Boteti East, and Lerala Maunatlala.
The criteria used for constituency allocation have also become a point of dispute among the UDC member parties. The issue of incumbency is particularly contentious, as the criterion for constituency allocation suggests that current holders of UDC’s council and parliamentary seats should be given priority for re-election without undergoing primary elections. Disadvantaged parties argue that this approach limits democratic competition and hinders the emergence of potentially more capable candidates.
Another disputed criterion is the allocation based on the strength and popularity of a party in specific areas. Parties argue that this is a subjective criterion that leads to disputes and favoritism, as clear metrics for strength and visibility cannot be defined. The BNF, in particular, questions the demands of the new entrants, the BPF and AP, as they lack a traceable track record to support their high expectations.
The unity and cohesion of the UDC are at stake, with the BPF and AP expressing dissatisfaction and considering withdrawing from the negotiations. Therefore, it is crucial for the leaders to expedite their meeting and find a resolution to these disputes.
In the midst of these negotiations, the BNF has already secured 15 constituencies within the UDC coalition. While the negotiations are still ongoing, BNF Chairman Dr. Molotsi revealed that they have traditionally held these constituencies and are expecting to add more to their tally. The constituencies include Gantsi North, Gantsi South, Kgalagadi North, Kgalagadi South, Good Hope – Mmathethe, Kanye North, Kanye South, Lobatse, Molepolole North, Gaborone South, Gaborone North, Gaborone Bonnignton North, Takatokwane, Letlhakeng, and Tlokweng.
The resolution of the contested constituencies will test the ability of the UDC to present a united front in the 2024 National Elections will depend on the decisions made by the three leaders. It is essential for them to demonstrate maturity and astuteness in resolving the constituency allocation deadlock and ensuring the cohesion of the UDC.