business
diamonds
De Beers takes trading to Botswana For years the government of Botswana and De Beers have shared ownership of the world’s most valuable diamond mines. The profits helped the country become a paragon of democracy and development, but as long as the rocks were auctioned in London, Botswana would be missing out. The new 10-year deal will shift the sorting and trading of the gems to Gaborone by the end of 2013. About 100 workers will be transferred from the De Beers London office to the Botswanan capital and the agreement is predicted to provide a significant fillip to the local economy by attracting diamond traders from around the world. In the first half of 2011, De Beers sold $3.5 billion in uncut diamonds from its English auction house. The government will also move beyond mineral extraction as it will start to independently sell diamonds from the co-owned mines, 10% of output at first and then 15% by 2013. “This agreement, and the tangible outcomes it will deliver, will enable Botswana to achieve its aspiration to be a major diamond centre engaged in all aspects of the diamond business," said mines minister Ponatshego Kedikilwe. Analysts are viewing the concessions as a neutral outcome for De Beers. "De Beers should benefit from a longer agreement as it removes the periodic disruption in having to wrestle with a new pact every five years," Des Kilalea from RBC Capital Markets told Bloomberg. "In a world with looming tightness in rough diamond supply, the certainty of a long-term agreement over the world's largest source of rough is welcome."
After 120 years of trading from London, De Beers has signed a deal to move its rough diamond sales to Botswana, who will finally get a slice of value-added profits. By GREG NICOLSON.
Read more:
1. De Beers to deal in Botswana in The Wall Street Journal
tuesDAY - 20 september 2011