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De Beers’ GemFair delivering ‘positive impacts’ to ASM sector in Sierra Leone – David Johnson

11 november 2019

david_johnson_xx.pngGemFair, a pilot project developed by De Beers to create a secure and transparent route to market ethically sourced artisanal and small-scale mined (ASM) diamonds, is already delivering “important positive impacts” in Sierra Leone.

Group head of strategic communications David Johnson told Rough & Polished’s Mathew Nyaungwa in an exclusive interview that they are now beginning to witness the miners displaying more formal behaviours and business practices.

He also talked about De Beers’ contribution towards the economy of Botswana through their five-decade partnership.

The group was recently accused of not helping reduce Botswana’s high levels of poverty and inequalities.

Below are excerpts from the interview.

De Beers earlier this year extended GemFair pilot project to 38 new mine sites, in Sierra Leone to market ethically sourced artisanal and small-scale mined diamonds. What has been the impact of the widened project?

GemFair is delivering important positive impacts to the ASM sector in Sierra Leone. We are starting to see the miners we work with exhibiting more formal behaviours and business practices as an outcome of GemFair’s training programme and the standards we have set out around human rights, responsible business conduct and environmental and health considerations. These standards are reinforced through classroom and site-based training. In addition, miners participating in the programme are benefitting from the wealth of knowledge of De Beers Group’s diamond buyers, who use every buying visit as an opportunity to educate miners in diamond valuation. This helps to ensure that miners are more informed and in a better negotiating position when approaching diamond buyers, whether that be GemFair or other buyers.

Do you have plans to involve more artisanal and small-scale diamond miners in Sierra Leone and beyond?

Absolutely. There has been a lot of interest in the programme and the GemFair team is continually onboarding new artisanal miners in Sierra Leone. While it is too soon to say when GemFair will expand into new territories, it is absolutely our aspiration to do so in due course once we move beyond the pilot phase in Sierra Leone.

What is the long-term potential of GemFair to the ASM sector?

While the programme is still in the pilot phase and we continue to monitor our approach, we believe GemFair has potential to deliver a real improvement to the prospects for artisanal miners in Sierra Leone and other artisanal diamond mining countries. However, any future location we consider must meet our minimum criteria in terms of the operating and political environment.

What are the challenges facing the ASM sector?

Artisanal and small-scale diamond miners face many challenges. Key challenges include:

• Exploration: limited resources and knowledge about exploration. Therefore, they are not always working in the best areas, which leads to lower productivity for sites and sub-optimal recovery of minerals.

• Extraction: without access to financing and technology, miners use basic techniques for mineral extractions. This results in labour intensive operations characterised by a lack of formal organisation and often led under hazardous conditions.

• Processing: a lack of resources and technology access means miners are unable to separate the valuable minerals from the waste using the most efficient techniques, which also impacts the diamond recovery process.

• Transportation: transportation techniques are generally limited, and miners use their bare hands to move tools and gravel from one place to another.

• In addition, a lack of access to capital for miners to finance their operations often forces them into unfair lending agreements with middlemen.

How many carats of diamonds from the ASM sector are getting access to De Beers’ industry distribution channel?

We do not publish details on this, however GemFair remains in the pilot phase with a limited number of participating sites.

When do you intend to integrate the GemFair technology with Tracr™ to prove the provenance and ethical sourcing of diamonds?

We have already integrated some GemFair diamonds onto the Tracr platform and are in the process of testing that integration as those diamonds pass through the value chain. However, GemFair’s digital solution already traces the diamonds we purchase to the individual mine site they came from (which has undergone the strict vetting procedures, training on ethical standards and compliance checks necessary to participate in the GemFair programme), so while integration with Tracr provides an added level of traceability, especially for matching some rough diamonds to their polished outcome, the data gathered by the GemFair solution is already very robust.

De Beers was recently accused by an OSISA executive of not helping reduce Botswana’s high levels of poverty and inequalities. What is your reaction to that?

In just 50 years following the discovery by De Beers Group of diamonds in the country in the late 1960s, Botswana has gone from being one of the poorest countries in the world to a modern upper-middle income nation – Botswana has had the world’s third-fastest economic growth rate over this period. This remarkable growth has been underpinned by the five-decade partnership between Botswana and De Beers Group, which is itself based on the agreement of terms that are fair and beneficial to both partners.

While De Beers Group is the commercial partner in the relationship and is not responsible for Government policy, we take our role as a corporate citizen in Botswana very seriously. We are proud to be leading and investing in a number of programmes to ensure that our presence in Botswana provides opportunity for the country’s citizens and leaves a positive legacy.

Such programmes include:

• A business mentorship programme for women entrepreneurs in the Okavango Delta through our partnership with UN Women, to help equip micro-business owners with training and skills to grow their businesses. The programme aims to train 250 women entrepreneurs by 2020 through a partnership with the Ministry of Nationality, Immigration and Gender Affairs and Adore Little Children (an Okavango-based NGO).

• The Tokafala Enterprise Development Programme, which focuses on promoting economic diversification and job creation in Botswana through personalised business mentoring, advisory support and facilitating access to finance and markets for participants. It has recently been expanded to include the development of youth skills. Has been running since 2014 through a partnership with the Ministry of Investment, Trade and Industry, Anglo American and Debswana.

• A partnership with Stanford Graduate School of Business ($3 million investment) to offer business training programmes for African business leaders from Botswana, Namibia and South Africa, and another programme to offer training from Stanford experts to young Batswana entrepreneurs.

• An education programme in partnership with WomEng to encourage women and girls living near Debswana’s operations to pursue STEM (science, technology, engineering and mathematics) careers. Over 400 junior and secondary school students have participated in workshop sessions to date, held at Jwaneng and Orapa mines. The next phase will see 60 students sponsored to attend a two-day Innovation Boot Camp in Johannesburg early next year. Students will also be provided with support for university and scholarship applications, as well as exposure to working in the mining industry.

In addition to the programmes mentioned above, we are committed to supporting local workforce development, procuring goods and services locally wherever possible and supporting the communities where we operate through financial contributions including strategic investments, philanthropic donations and gifts in kind.

What is the economic impact of De Beers’ operations in Botswana?

The Government of Botswana is a direct 15% shareholder in De Beers Group meaning that not only does Botswana benefit from the sales revenues of its own diamonds, but also from the global activities of the wider De Beers Group. De Beers Group’s commitment to Botswana has continued to widen and deepen over time, and alongside the huge sums of capital invested in Botswana over the years, in 2013 De Beers Group relocated its multibillion dollar global sales operation (including people, technology, and global rough diamond sales) from London to Gaborone.

De Beers Group plays a significant role, not as a foreign investor but as a corporate citizen, in building Botswana’s future. De Beers Group makes a substantial socioeconomic contribution to Botswana and, besides the Government itself, is the largest single contributor to the Botswana economy. For example, four out of every five dollars of revenue generated by Debswana alone accrues to Government. In 2014 an economic impact study showed that the diamond partnership between De Beers Group and Government generated more than $4 billion of value to the Botswana economy during the year, which is equivalent to more than 25 per cent of GDP – double that of the entire wholesale and retail sectors. The relocation of De Beers Group’s global sales function alone contributed more than $400 million to GDP in 2014.

Equally important is the contribution the diamond partnership makes to employment, both directly and indirectly through its supply chain. Including people employed as a result of the relocation of the sales function, in 2014 the partnership contributed more than 34,000 direct and indirect jobs in Botswana, equivalent to one in every 20 jobs in the country. Meanwhile, De Beers Group also makes substantial investments across the diamond value chain, including in consumer marketing activities, that support the long-term growth of Botswana’s economy.

When are you going to start and end negotiations of a new sales and marketing deal with Botswana?

The Sales Agreement runs to the end of 2020 and is functioning well, for the benefit of both partners. While we are unable to comment on what may or may not form part of any future agreement with Government (as the process is commercially sensitive), we remain fully focused on continuing to be a dedicated partner to the people of Botswana, and to delivering on our commitments in the current sales agreement.

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