At the recent JCK show, I had a joint interview with two of the most important people in Botswana’s diamond industry: Mmetla Masire, CEO of Okavango Diamond Company (ODC), the state-owned seller, and Andrew Motsomi, managing director of Debswana, the De Beers–Botswana joint venture that oversees De Beers’ mines in the country.
Masire and Motsomi discussed what Botswana’s new 10-year contract with De Beers means for the country’s diamond trade, whether the natural diamond business is experiencing a turnaround, the future of diamond marketing, and just what they were doing at JCK.
What percentage of Debswana’s production is Okovongo now selling?
Masire: We are now up to 30% [from 25%]. It will be 30% for five years, then it goes to 40%, and then it will ramp up to 50%.
A lot of people in Botswana were rooting for ODC to get a greater portion of the sales. I understand that Debswana is a 50/50 partnership, but, presumably, De Beers earns a markup when it sells its share of Debswana output and ODC earns a markup when it sells its stones. How much more will Botswana earn by selling its diamonds through ODC?
Masire: You are making an assumption that selling is always profitable. In a market like this, it might not necessarily be helpful to sell the largest share. Yes, all things being equal, the person with the largest share will make more money. Sometimes the person with the largest share will be defending the loss, and wanting to minimize the loss. So there are pros and cons.
Will ODC be selling its rough in any particular way? I know you did tenders for a while.
Masire: Yes, we’ve been selling by auction, but from September this year, we will introduce contracts. We won’t call them [our clients] sightholders. That’s a De Beers name. We will call them source contracts.
Do you expect to sell to clients using the same approach as De Beers?
Masire: We are doing something different. We are doing our own thing. We’ve always been different in how we approach sales; even our auction approach is different. It’s not surprising we will be taking a totally different approach than De Beers. We are developing our selection criteria and a new pricing model. I can’t give a lot of details because it hasn’t been finalized.
READ THE ENTIRE ARTICLE HERE
(Top photo: Getty Images)
Source : jckonline