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Botswana Diamonds sees bright light in Zim, at least for now

04 june 2012

Botswana Diamonds is one of the few known established diamond companies that have openly shown interest in Zimbabwe’s diamond mining. Company chairperson John Teeling told Rough & Polished’s African Bureau Editor in Chief Mathew Nyaungwa in an exclusive interview that Zimbabwe, within a short period, would be the world’s largest diamond producer by volume.

This, perhaps, explains why Botswana Diamonds was so keen in doing business in the southern African country despite the punitive indigenisation laws and possible trade embargos from the United States.

The company had already partnered with locals on a series of claims in the Masvingo/Beitbridge area thought to contain kimberlites.

Although a small bulk sample was under way to determine whether the kimberlites in Masvingo and Beitbridge were diamondiferous, Teeling said no results had come yet.

He said Botswana Diamonds was awaiting response from Harare regarding its application for mining claims in Marange.

Teeling also commented on the company’s exploration licences in Botswana and Cameroon.

Below are the excerpts.

Botswana Diamonds has a 49/51 joint venture with local partners on a series of claims in the Masvingo/Beitbridge area, in Zimbabwe thought to contain kimberlites. Who are your partners and what is the progress on a small bulk sample being carried out?

Our partners in Beitbridge are Zimbabwean businessmen. Sampling is ongoing with no results yet. The objective is to prove the kimberlites are diamondiferous.

Your company is also targeting Marange diamonds, in Zimbabwe. Have you secured claims yet?

Our JV application on a block in the Marange area is on the President’s desk since 2010. We have heard nothing.

Given the trade embargo imposed on foreign companies mining Marange diamonds in partnership with the state-owned ZMDC by the United States, how does your company seek to operate profitably in this area?

Botswana Diamonds must act in conformity with law. We are hopeful that sanctions relating to Marange will be lifted prior to mining.

Do you think that the trade embargos are justified?

Botswana Diamonds is a diamond explorer not at all political. Our task is to create wealth for our shareholders and for the people of the areas in which we work.

What is your take on the state of diamond mining in Zimbabwe vis-à-vis the indigenization laws?

There is uncertainty over the indigenisation laws in Zimbabwe. Uncertainty is bad for investment. If local investors can find the cash to take a majority stake in projects then some development will take place. If not, development will be slower. I have no objection to local ownership.

Do you think Zimbabwe has potential to be one of the leading diamond miners in Africa?

I am certain that Zimbabwe, within a short period, will be the world’s largest diamond producer by volume. By value, Botswana will remain No.1.

Botswana Diamonds is also undertaking diamond projects in Botswana and Cameroon. Can you provide an update on these projects?

Botswana Diamonds is active in the Cameroon where a diamond sampling programme is underway in the Mobilong area next door to the new CNK diamond mine. First results are likely end Q2. The focus in Botswana is on providing data for the prospecting model utilised by our partner. This will take some months but we are very hopeful that this model, never before used in Botswana, will identify new exploration targets.

What is your take on the current state of the diamond industry both rough and polished?

Supply of rough will be constrained in the coming years while demand will forge ahead in the BRICs and in other emerging nations. Prices of rough will continue as volatile as they have been in recent years but the overall trend should be positive. Polished prices will show less volatility but will maintain a positive trend.

BHP and Rio Tinto have indicated their plans to exit the diamond industry to pursue other projects. Do you think this is a vote of no confidence on the industry?

It is bad news for the industry for BHP and Rio to exit. The average investor does not delve too deeply into the reasons why which are simply that neither company can get the scale necessary to justify time and effort. Combine this with a series of bad share price performances by independent and junior diamond explorers and you have strong negative sentiment toward the industry. This should be temporary.

Apart from Botswana, Cameroon and Zimbabwe, are there any countries you are targeting for diamond exploration and mining?

Botswana Diamonds is looking at a series of potential opportunities ranging from exploration in India to taking over some projects from struggling companies.

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