Diamond deal with Botswana makes sense

16 Feb, 2018 - 00:02 0 Views
Diamond deal with Botswana makes sense

eBusiness Weekly

The impending deal between Zimbabwe and Botswana for Zimbabwean diamonds to be processed, cleaned and polished by the Diamond Trading Company in Botswana makes a great deal of sense.

Botswana has, over four decades, built up the infrastructure and expertise to process its own vast diamond resources so there is an opportunity for Zimbabwe to take a short-cut to upgrading its own output with minimal investment.

There are other advantages for both countries. Botswana’s production is likely to start falling soon according to some estimates, so branching out into contract processing allows the huge investments to continue paying off. In any case, even if new finds keep Botswana’s production at present levels it is always useful to maximise work.

So long as an acceptable processing fee can be agreed, Zimbabwe gains a number of advantages besides the short-cut to upgrading what we want to sell.

One of the biggest advantages will be to overcome what could be resistance among some potential buyers to dealing in Zimbabwean stones.

There have been official allegations inside Zimbabwe that stones were looted or were being privately marketed, the reason why Zimbabwe’s diamond mines were consolidated into a single State-controlled entity.

And even now a Parliamentary committee is joining the official investigations into just what has been going on.

There were also around the beginning of the Zimbabwean diamond finds allegations and counter allegations of how the mining concessions were being awarded, and there were unsuccessful attempts to invoke the relevant clauses of the Kimberly Process to ban sales of Zimbabwean diamonds. But those determined attempts, generally politically motivated, did create nervousness and probably depressed prices.

DTC has an exceptional reputation worldwide, and potential buyers of Zimbabwean stones processed by that company will certainly accept such a third party able to certify that the stones processed were official, properly documented and generally shining with legality as well as glamour. That alone will add value.

In all fairness to Zimbabwe, Botswana found it a lot easier to set up a strict system from the very beginning. Botswana’s diamonds are mined from the kimberlite pipes, meaning that relatively small areas need to be set aside for mines and that mining from the very start has to be a serious investment requiring high levels of technology.

The fact that the mines are in a sparsely inhabited area was a bonus, but basically a Botswana diamond mine is a conventional mine and not that much different from a big gold or platinum mine.

Zimbabwe’s main diamond resource is an alluvial field spread out over a large area of a fairly densely populated district, the worst possible security problem.

At the beginning stones were on the surface and even now there is a security nightmare.

Of course if Cecil Rhodes and his buddies had found the Marange fields, as they hoped to, they would have just used ethnic clearing to create the diamond zone, something neither possible in the 21st century nor something that any people-centred Government could contemplate.

Namibia’s main diamond field is also alluvial, but in a section of the driest desert on earth, so the security problem is keeping people who fancy a stroll out rather than coping with people who already live there.

But the security systems in place in Namibia do illustrate the potential problems of alluvial fields even if the Namibian Government has replaced the South African colonial labour laws with something a lot more modern and in general agreement with human rights.

There are a number of details still to be settled in the Botswana-Zimbabwe diamond deal but these should not be insurmountable and the advantages to both countries are sufficient to ensure that negotiations are serious and seeking solutions rather than just going through the motions.

Both countries now have policies of openness and transparency, so any agreement will be public and open to inspection and comment.

Such a deal will also accelerate the necessary co-operation between the two countries, especially in business and investment.

The two economies are largely complimentary rather than competitive and there are obvious opportunities on both sides of the border. Converting political frameworks and talk into practical business decisions is a major step forward.

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