Government dream of having sound diamond beneficiation could remain a dream after all as it is hard to compete with the industry giants India and China, Shoaib Vayej, Portfolio Manager at Afena Capital South Africa revealed.
The challenge now facing the country is how to generate greater value from the beneficiation due to the high costs of cutting and polishing. De Beers, in its 2014 Diamond Insight Report, said that the cost of cutting in 2013 ranged from $60 to $120 a carat in Botswana whereas in India the range varies from $10 to $50 a carat.
“The cost of cutting and polishing in India and China is very competitive ranging between $10-20 whilst in Botswana is around $40-60,” said Vayej. Diamond exports are the country’s biggest revenue earner and economic mainstay.
Botswana is six times more expensive than India and for the larger more expensive stones Botswana is almost three times as expensive as India. The reasons for these cost differences are: low productivity, low cost of ancillary services, and the difference in the number of working days in a year – 232 in Botswana as opposed to more than 280 days in India.
Vayej advised Botswana to consider other avenues that might be profitable. He highlighted that the best margins are realised in mining and retail not the cutting and polishing
“I would urge Botswana to buy a portfolio of retail because 60 percent of diamond profits are locked in retail because beneficiation is not competitive,” he said.
A fewcompanies have already closed their operations in Botswana since then, because of challenges in the diamond industry’s midstream sector during 2015.
Vayej however observed that key mines are very well placed on the cost curve. However, he emphasized the need to strike balance between optimal rent extraction and fiscal stability.
“Debswana must cut on unprofitable production because demand is low and prices are suppressed,” he said.
Vayej underscored the need for Botswana to look for ways to diversify the economy and not rely on diamonds.
“Diamonds are at a down point and from the look of things there is still room for price falling. There is more pain to come though sales may rebound,” he noted.
“If the world’s ‘diamantaire’ had their way, no cutting or polishing would occur in Botswana and southern Africa at all. The answer to why cutting occurs in Africa is as De Beers politely puts it in its publication because of ‘government policy”
Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.
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Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.
The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.
Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.
“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.
He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.
Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.
“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.
He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.
He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc
“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran
Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.
“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.
Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that the BIE provides a fertile environment where they can meet, share ideas and grow professionally.
“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.
He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.
“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams
He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .
Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.
“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.