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04 march 2019

eric_molale_xx.pngBotswana said it will begin new diamond marketing and sales negotiations with De Beers in June or July this year.

Mineral resources minister Eric Molale told Rough & Polished’s Mathew Nyaungwa on the sidelines of a mining conference in Cape Town, South Africa that he cannot divulge what the southern African nation would put on the table during the negotiations.

However, reports suggested that Gaborone wanted to boost its share of independently marketed and sold rough to 30% from the current 15%.

Botswana, as speculated, also wanted to be heavily involved in setting rough prices for its goods, which are currently decided almost singlehandedly by De Beers.

The current sales agreement would come to an end in March 2021.

The agreement, among other things, saw De Beers agreeing to shift its diamond aggregation and sightholder sales to Gaborone from London.

Below are excerpts from the interview.  

When are you going to commence negotiations for a new marketing and sales agreement with De Beers?

They are going to start this year in June or July.

What is the time frame for the negotiations?

We normally want them to conclude before the end of the running agreement. The running agreement concludes in 2021 in March. So, I think by the end of 2020 we will be having an agreement in place waiting for it to immediately take off after the conclusion of the one that is running now.

What are your demands for the next marketing and sales deal?

No! no! That I won’t tell you (laughs). You don’t go hunting with rattles on. You go swiftly and stealthily, don’t you?

But are you looking at extracting any big concession from the upcoming negotiations?

The purpose of negotiations is for each part to see each party’s point and we are saying De Beers must see our point when we put issues on the table.

You scored big in the current agreement, are you looking at doing the same again?

Well, well we are going to negotiate my friend (laughs).

The current profit split is 81% for Botswana and 19% for De Beers. What more do you want to extract from De Beers?

You have to know what you have, what you are doing and how much of it and what potential exists... For instance, we know that the minimum at which De Beers can continue to exist comfortably and profitably is if the profit split is 97% to 3%. They will still exist with 3%, but we are people and trying to say to them, ‘look this is for all of us’. We know as our partners they have developed technology that helps us dictate natural diamonds from synthetics. They have advanced technology, so they also have leverages. When we say negotiate it means you talk, you want quietly to have the longer end of the stick, but they also want to have the longer end of the stick…

You rattled them (De Beers), are they not worried?

No, they are not worried, for a long time we have been talking this thing. It’s not that we made a scoop in the past negotiations. I have been in the industry since…from the government side so we have been softening them to know that one day they will have to come back to Africa to do diamond trading in Africa and they were aware of that. They were amenable to that, but there are other things that are still available that we are going to talk about.

There were reports that Zimbabwe was planning to add value to its stones in Botswana before they go under the hammer. How far true is this?

Well, we are talking with the Zimbabweans. Zimbabwe is part of the Kimberley Process, and you know the Marange alluvial field is a sizeable deposit and would want them to come and be part of the trading centre in Botswana. They have actually asked us to put their diamonds in a state that they can be saleable, so we are doing that for them as a way of saying, see, we can do good for you guys, come over here.

When did this start?

I think late last year, but it’s for a small fee, though.

You talked about the Kimberley Process and there has been talks about the change of definition of conflict diamonds to include issues of human rights, what is Botswana’s position on the issue?

Well, Botswana always cherishes the principle of human rights and individual freedoms, minerals or no minerals. So even as we go into mining we continue to cherish that, for instance, if we find diamonds in your ploughing field, we don’t chase you away, we sit-down with you and say, ‘the diamonds under your field are ours so we want you to be considerate and move so we can mine these diamonds because we all own them’. Then we will compensate you in accordance with the requirements of the constitution.

Your country and Russia competed to become the vice chair of the Kimberley Process, but eventually the Russians emerged victorious (interrupted)…

No, we are nice guys, we had to give way for the second time for the Russians because they said they couldn’t remember when we gave way for them 10 years ago and we said we hope next time you will remember we gave way for you. This is a one-year affair, so we are not in a hurry to take over the chairmanship. We are leaders in the diamond industry, so we are not in a hurry to take the KP chairmanship. However, we subscribe to it fully and we are going to participate fully.   

Is it true that there is a diamond deposit as big as Jwaneng that was discovered in Botswana?

Yes, there is.

Where?

No! [All I can say] it’s in Botswana (laughs).

Do you think that rare-earth minerals will be as big as diamonds in Botswana?

They will become bigger than coal as coal has become a pariah of the world. We have coal in abundance but try to touch it, nobody will finance you or if they finance you they will charge you rates that will leave you discouraged.[However] with the rare earth minerals you don’t have to mine large quantities, all you have to do is have substantial quantities that you can beneficiate and export.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished