Diamonds shine in Botswana

2013-11-10 14:00

The business of buying uncut diamonds moves to Africa from the exclusive London business district and it may herald a time of radical change for the southern African nation, writes Jan de Lange

There’s a new spirit in Gaborone – an atmosphere of new money – because tomorrow the bulk of the world’s diamond trade will return to Africa.

Here and there, donkeys and goats are wandering around Gaborone’s streets, destroying the lawns on the island in the double roadway in front of the new Radisson Blu Hotel.

They scratch around in the dust on the building site next to the Lansmore Hotel and move off reluctantly when the construction workers chase them away.

They may or may not be there tomorrow, the day that the buying of uncut diamonds sold by the Diamond Trading Company (DTC) moves to Africa.

This is worlds away from the tradition-laden 17 Charterhouse Street in the exclusive London business district where more than 70% of the world’s uncut diamonds have been sold for decades.

Tomorrow, the 81 sightholders from around the world will meet in Botswana for the first time.

The sightholders, who come from around the world, are selected customers of De Beers.

They come from the world’s largest and most respected jewellers, such as Cartier, Steinmetz and Laurence Graff.

They will meet at the new Las Vegas-like glass complex at 9am, go through the strict security system and then to their special sightholder rooms on the top fourth floor. There, each sightholder will get a “box” of diamonds.

Paul Rowley hails from the UK and is De Beers’ chief representative between diamond mines and diamond buyers.

He says: “They aren’t really boxes. That’s just what they are normally called in the sightholder community and in the diamond industry.

“A box of diamonds is, in fact, simply a saleable mix of diamonds that we have put together in a collection.”

About 120 boxes of diamonds are made up and each sell for between $1.5?million and $15?million (between R15?million and R154 million).

They are all smaller, uncut diamonds of five carats or less. Larger stones are sold separately (one carat is 0.25?grams).

The boxes are made up according to the needs of customers.

For example, Graff Diamonds specialises in high-quality diamonds of two carats and larger.

The boxes for Graff’s representatives will be put together with those needs in mind.

Every sightholder is given a special office on the southern side of the building with tables in front of the windows. Here, the box can be viewed in natural light, but not direct sunlight.

There are electric lights and mounted magnifiers.

“Some of them sit there for three or four hours and make a decision to buy.

“Others spend two or three days here before they make a decision,” Rowley says.

“It’s not an auction. The sightholder buys the box or rejects it. However, a box is seldom rejected because such a box can be offered to another sightholder.”

However, a sightholder can buy a box and sell 10% of the contents back to the DTC.

The valuation of each box is an extremely complicated process. There are 12?000 points on which diamonds are valued.

However, the predominant factors are the weight, purity, colour and shape of the stone.

Stones from Botswana’s famed Jwaneng mine are famous for their cubed shapes.

Jwaneng is the world’s largest diamond mine and lies about 160km west of the capital, Gaborone.

A sample of 10% of the diamonds handled by the DTC is taken and revalued.

The diamonds are accompanied by representatives of the Botswana government to increase the credibility of the process.

Most of the diamonds sold here are polished in India. That country has no diamond mines, but it polishes 76% of the world’s diamonds in terms of value and 92% in terms of volume.

India employs about 750?000 people in the diamond industry.

Botswana, on the other hand, polishes 2% of the world’s diamonds in terms of value and 1% of the volume of the world market.

It is clear that the DTC’s move from London to Gaborone brings the possibility of economic benefits that could turn the city into a sort of Dubai of southern Africa in the next decade.

De Beers produces 30% to 35% of the world’s diamonds. But up to 70% of world production is sold by the DTC system and will in future pass through Botswana regardless of where in the world the diamonds are mined.

When De Beers chairperson Nicky Oppenheimer signed the agreement with President Ian Khama in 2011 for the DTC to move to Botswana, there were fewer than six sightholders in Botswana.

Today, there are 21 in Gaborone and there is little doubt that more of the world’s jewellery giants will move there.

There are 10 sightholders’ polishing factories in South Africa. Namibia has 13 and India has 30.

Many of the polishers working behind the machines come from India, Madagascar and even Israel. But at least half of them are citizens of Botswana.

But diamond polishing is not the only related industry associated with diamonds. All the major banks have already opened in Gaborone as have couriers and several brokerage services.

Graff and two other major diamond polishers, Steinmetz and Brian Gutkin, established the Diamond Technology Park just behind DTC Botswana.

It’s no wonder then that luxury hotels, several shopping centres and even casinos are springing up between the grazing donkeys and goats.

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