Botswana Diamond Manufacturers Association - Mining Outlook - issue 4

BRIGHTENING THE BOTSWANAN ECONOMY

BOTSWANA DIAMOND MANUFACTURERS ASSOCIATION (BDMA) INDUSTRY SPOTLIGHT

S P OT L I G H T O N T H E B OT SWA N A D I A M O N D I N D U S T RY It is well-documented that Botswanan soil is very rich in diamonds, which has secured its financial future with De Beers to improve the country’s living standards Writer: Rachel Carr | Project Manager: Dave West

T

he small landlocked nation of Botswana in Southern Africa is the second-largest producer of diamonds in the world. Furthermore, its colourless gemstones are essential to stabilising the country’s economy and building infrastructure.

Indeed, Botswana relies on diamonds for 90 percent of its exports, and the industry is directly responsible for one in 20 jobs. Meanwhile, last year the gemstones accounted for around 30 percent of Botswana’s revenue, with De Beers depending on the nation for about 70 percent of its rough diamond supply, equating to 24 million carats.

In order to operate in Botswana, De Beers founded the De Beers Botswana Mining Company in 1968, later evolving into Debswana. Today, the company has four diamond mines and is the world’s leading producer of diamonds by value.

De Beers provided the necessary conditions for Botswana to experience the highest economic growth rate since its independence from Britain in 1966 when it agreed

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to a joint venture with the government, accruing revenue from diamonds. However, since 2000, the economy’s growth rate began to stall and was below the sub-Saharan African average. To negate this, along with persistently high unemployment, the government of Botswana introduced a policy to diversify the economy.

Additionally, Botswana is one of the few sub-Saharan African countries that has truly benefitted from its mineral wealth. Thanks to the iconic and timeless diamonds, it is now considered a middle-income country, a status it has been elevated to within the last 50 years.

A major contributor to the country’s wealth is the Debswana Jwaneng Mine, located in the Naledi River Valley in Southern Botswana, which is one of the world’s deepest, most valuable diamond mines. Significantly contributing to the economy since it opened in 1982, approximately 50 percent of public revenue, 33 percent of GDP, and over 80 percent of foreign earnings, the mine is committed to empowering the community by tripling its

citizen spending and increasing employment.

One of the most successful elements of the industry is diamond beneficiation – the downstream possessing of rough diamonds, which were previously exported as rough diamonds and processed elsewhere. In fact, the local marketing of domestically produced gemstones has helped the diamondcutting and polishing field, creating additional industrial jobs in the country. Consequently, it is now the largest manufacturing sub-sector in the country, growing at an exceptional rate, with factories continually adopting and employing new technologies.

Botswana’s joint venture with De Beers has also facilitated publicity for its diamond industry from an unexpected source, as the British royal family is known to have a connection to its diamond market. Prince Harry, the Duke of Sussex, designed an engagement ring for

the Duchess of Sussex, Meghan Markle, with a cushioncut diamond, having travelled to the country to select it personally.

Known as the Markle Sparkle effect, the Duchess’ influence extends to the Millennial population, who want to buy sustainable and ethical diamonds and emulate the antique aesthetic of the classic cushion-cut stone, ultimately benefiting the local population.

This royal recognition is priceless for Botswana, placing its diamond industry as a producer of conflict-free jewels, which appeals to a new generation of diamond buyers. The social and ecological responsibility displayed by the Duke and Duchess of Sussex has, in some way, contributed to the country’s transformation into one of Africa’s economic success stories. In fact, the African Development Bank has praised Botswana for one of the world’s longest-sustained economic booms.

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ADDING SPARKLE TO LIFE

We talk to Sedireng Serumola, Managing Director of DTC Botswana, about responsible diamond manufacturing and unlocking the value of both gems and people Mining Outlook (MO): Briefly introduce us to DTC Botswana.

Sedireng Serumola, Managing Director, DTC Botswana (SS): Debswana is a 50/50 joint venture partnership between the Government of the Republic of Botswana and the De Beers Group. We are the world’s largest and most sophisticated rough diamond sorting and valuing operation.

If you get the opportunity to come to Botswana, it is a wonderful world-class facility, and what we want to do for the future is also informed by what we have right now.

Every organisation has its history, and ours is grounded on the visionary leadership that this country has had. For me, this is always a reminder to myself and my colleagues that we must take our responsibilities very seriously.

You will find that one of the most important

things was one of the early decisions made in the 1960s by the national leadership, including the chiefs, that all mineral rights are invested in the state. These minerals then benefitted Botswana as both a society and a nation.

The Government of the Republic of Botswana formed the Botswana Diamond Valuing Company (BDVC) in 1971, the same year that Botswana’s first diamond mine was established at Orapa. In 1982, the BDVC building, known as Orapa House, was opened in Gaborone. After sorting and valuation, diamonds were sold to the De Beers Central Selling Organisation (CSO) in London. In 2006, DTC Botswana replaced BDVC and opened its new premises in 2008.

More specifically, our organisation was formed in the early 1970s, and in 2006, a new company called DTCB, replaced the old company, and we then moved to our new premises.

What we do at DTC Botswana is clean, sort, and value diamonds coming from Debswana, which is another 50/50 partnership between the government and DTC Botswana. Once we have sorted

the diamonds according to the 2011 DTC Botswana business model sales agreement, we sell them to two parties, the ODC and De Beers Group Site Holder Sales (DBGSS).

In the diamond pipeline – which includes exploration, mining and recovery, sorting, valuing, and sales, cutting and polishing, jewellery manufacturing, and, finally, retail – DTC Botswana falls in the midstream stage of the diamond value chain, i.e., the sorting, valuing, and sales. As part of our new strategy, we are actively finding ways to create linkages with the beneficiation sector, as beneficiation is of big importance for Botswana.

MO: What for you differentiates DTC Botswana from the competition?

SS: DTC Botswana has the unique ability to sort up to 45 million carats annually. Due to prevailing market conditions, we currently sort about 23 to 24 million carats annually.

Our main operations comprise three main processes: diamond cleaning, sorting, and valuation.

Diamond cleaning consists of performing acid cleaning of all of Debswana’s diamond production and presenting the final product.

Sorting ensures accurate valuation of all

production into the cut, colour, clarity, and carat size and results in consistent delivery of rough diamonds to customers Valuing consists of selling to two customers: 85 percent to DBGSS and 15 percent to ODC. For me, it would be amiss to not talk about DTC Botswana without talking about our employees. What we do, and primarily what we see, is that we use hand sorting and technology for the lower sizes. However we are still finding that for the final product, especially for the top end, we need to bring in people. We cannot replace people.

MO: Are there any recent key achievements that DTC Botswana has accomplished that you would like to highlight?

SS: Our strategy at DTC Botswana aims to transform the company into a High Performing Organisation (HPO) with a significant value release (revenue). This strategy was purely developed in-house; traditionally, we get facilitators from outside, but this came out of a situation when we were in lockdown and realised that we could find better ways of being productive.

As I have said at a personal level, this was one of the best decisions ever made because the

outcome is even better than anything I have seen in the past.

The short version is that in terms of our ambition, we want to pioneer a new diamond world and sorting environment. We have the facility, and we have the skills and purpose.

Our new purpose comprises unlocking diamond value and adding sparkle to life.

Unlocking diamond value entails realising the best potential from our diamonds by enhancing their value – thus maximising their worth, delivering right the first time and on time to our customers, and revealing the natural beauty and uniqueness that captures hearts and holds a promise of eternal love.

Adding sparkle to life entails impacting Botswana’s economy through the brilliance of our experienced workforce, which provides opportunities for sustainability and growth, an outstanding customer experience that draws exceptional satisfaction, and promotes opportunities for the betterment of lives in Botswana through more impactful social performance initiatives.

Our new visions include pioneering a new diamond world in sorting and valuing, stepping up as an organisation to not just be an industry player, but to become an industry leader, defining diamond sorting and valuing by being the first to explore and drive innovation and technological advancement, and promoting sustainability – i.e., meeting the needs of the present without compromising the future.

MO: Tell us about any major challenges DTC Botswana has faced and what steps have been taken to overcome them.

SS: We have faced challenges over the years, and COVID-19 was one of them. We are still dealing, to a certain extent, with the lingering effects of the pandemic.

Some of the challenges we have faced out of the pandemic, and the impact of the Ukrainian and Russian war, are the supply chain challenges. Some of the equipment and the goods you order also take longer, and generally, the high inflation environment is one of the things we deal with.

It is important for us as an organisation to remain resilient and adaptable to ensure that we can ride the storm and be flexible in terms of our product offering. Our people, in my view, have been strong and able to deliver exceptional results despite all those challenges.

MO: Can you further detail the DTC Botswana Diamond Academy and the accreditation that it has earned from the Botswana Qualifications Authority (BQA)?

SS: We have an in-house diamond academy that we have developed over the years so that we can train people who are now getting degrees and diplomas so that we can provide them with future skills.

We have had some incredible trainees in the last two years or so, in fact, I can recall last year, one of our top-performing sorters was somebody with less than five years of experience.

They have the opportunity to learn fast,

and we are also taking steps to look at this academy and see what we can do to ensure that it doesn’t only support DTC Botswana but also works closely with diamond manufacturers. Hence, the trainees have the necessary skills and the basics of sorting before they get to manufacturing.

In some of our products, especially for the largest and most special stones, one of the things that we look at and try to build into our training is for people to have the final, polished outcome in mind for a diamond and to do so, you need to have the basic understanding of manufacturing as well.

MO: What is DTC Botswana’s core mission, and what are some current projects that you are excited about?

SS: We don’t only work hard; we play hard as well.

We had an event back in July celebrating a holiday where you dress up and go to the horse races. We also celebrate significant moments like DTC Botswana mothers and mother figures on Mother’s Day. The impact on life, the communities in Botswana, the society at large, and our customers are incredibly important. You can also think that adding sparkle to life really is the bling, bling in the literal sense for the customers.

MO: Looking ahead, what are DTC Botswana’s key priorities and endeavours for the future?

SS: In our environment, technology is key.

We are leveraging technology to improve productivity, cost, and operational efficiency.

It’s not only for us in the sorting environment and the sorting houses, but even for the manufacturing centre.

People talk about strategy being about choices. For us, we settled on four strategic priorities around exceptional customer experience. That is where the value release will be, technologies and innovation – it’s a given. Sustainability is also a given, seeing where the world is going, along with intentional organisational capability.

At the end of the day, our purpose and ambition is our impact on society, the shareholder distribution, and skills development for our employees and the community.

We are looking forward with active excitement to also work with the government and the private sector so that we can transform this business. In my view, the government can’t do it alone and requires companies like DTC Botswana to be able to contribute to society at large.

dtcbotswana.com

INTERVIEW:

B OT SWA N A D I A M O N D M A N U FAC T U R E R S A S S O C I AT I O N ( B D M A ) BDMA’s objective is to represent and advocate for its members while advancing the interests of the diamond industry - the lifeline of the country’s economy. We speak to its Chairman, Siddarth Gothi, about the role BDMA plays in developing the dynamic presence of diamonds in the global gemstone market.

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Mining Outlook (MO): Firstly, could you talk us through the origins of BDMA – what led to its creation and what is its current vision and mission?

Siddarth Gothi, Chairman (SG): BDMA was established as a non-profit organisation (NPO) in 2007; today, it is the voice of Botswana’s diamond-cutting and polishing industry, consisting of De Beers Sightholder members and associated members, who are cutting and polishing license holders in Botswana and brokers for the industry.

It began with a vision to create a sustainable diamond industry in Botswana by utilising the country’s most valuable resource in tandem with fostering inclusiveness, thereby driving the country’s sustainable economic development and social transformation.

BOTSWANA DIAMOND MANUFACTURERS ASSOCIATION (BDMA) INDUSTRY SPOTLIGHT

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MO: How has BDMA developed and progressed regarding its mission, and what has it achieved?

SG: The initial mission was to represent the beneficiation and localisation of the industry in order to align it with government policies. This was followed by the aim to become the most important and responsible stakeholder in the Botswanan diamond industry and to ensure a stable and conducive business environment for industry players and relevant stakeholders.

Subsequently, our core values remain in continuing to develop a culture of professionalism, integrity, trust, continuous learning, collaboration and consultation amongst the industry members and its stakeholders.

MO: For you, what is the most exciting aspect of the diamond industry in Botswana?

SG: Botswana has been lauded for its effective management of diamond supply. De Beers backs this through its Global Sightholder Sales (GSS) headquarters, which positions the country as an exciting destination for diamond cutters and polishers. This is due to the guaranteed access to diamonds,

available for local Sightholders of De Beers, who cut and polish their diamonds within the country.

Furthermore, the country’s good governance and a red-carpet welcome to the diamond-cutting and polishing factories have made Botswana the favourite destination for these services.

MO: Conversely, what are the biggest challenges facing the industry at present?

SG: The absence of a diamond training school, which is vital for sustaining the diamond-cutting industry, is a current challenge. The key industry players do not have access to an available skilled workforce; therefore, the factories are expected to invest heavily in training the workforce locally. This leads to a higher cost in the production of diamonds within the country compared to India, which is the world’s largest and most economic diamond-cutting centre.

Moreover, the sudden increase in Botswanan diamond-cutting factories during 2022 has led to a severe employee movement within the industry, due to the shortage of an available skilled workforce.

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The role of BDMA is to ensure the industry is functioning smoothly and, therefore, to resolve any issues efficiently and appropriately

The fast increase was a shock to existing factories in Botswana, whilst putting a strain on the established cutting facilities, which were operating smoothly before the infusion of almost 20 new factories within one year.

After a reduction in polished diamond purchases in the US and China, the global diamond industry slowed down as the industry’s midstream sector continued to take a cautious approach in Botswana. However, even though the factories are seeing a slowdown as a result of ongoing macroeconomic challenges, the future looks optimistic.

MO: Are there any key aspects of the industry you would like to highlight?

SG: As President of Botswana H.E. Eric K Masisi says, “Botswana are diamonds, and diamonds are Botswana.”

We are a country heavily dependent on diamonds, as they have served the country well for over five decades since independence. Therefore, the diamond industry has helped the country move from poverty to upper middleincome status, accelerating its economic growth. During this time, additional high levels of public spending have created a better standard of living for the majority of the population.

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Botswana’s economic growth also increased revenue, allowing for further developmental investment, and lifted national wealth levels rapidly, allowing for public services and facilities - once merely just aspirational to be developed. This includes free public healthcare, access to free primary and secondary education, and the development of transport, energy and water infrastructure.

Botswana has managed to leverage the potential of its diamonds. As former president Festus Mogae states, “For our people, every diamond purchase represents food on the table, better living conditions, better healthcare, potable and safe drinking water, and more roads to connect our remote communities.”

In addition to supporting local communities through cutting, polishing, and buying diamonds with known provenance from De Beers GSS, our members support local economic development. The diamond industry is a major contributor to the national economy, and by purchasing diamonds from the country, we contribute directly to the nation’s economy and add value to the local industry while supporting over 4,200 local jobs.

Diamonds positively impact the community and country; the vital product has become value-added by being exported after being studded into beautifully crafted pieces of Botswana jewellery. Additionally, the benefits of working with Botswana Diamonds extend beyond the conflictfree label. Ethical diamonds mean no human rights abuses, and employees are fairly paid with safe working conditions and environmentally sound practices.

BOTSWANA DIAMOND MANUFACTURERS ASSOCIATION (BDMA) INDUSTRY SPOTLIGHT

MO: Are there any plans, goals or projects in the pipeline, or in the future for BDMA? SG: As an important stakeholder in the diamond industry, BDMA significantly impacts policy and decision-making with the relevant authorities in Botswana. We also participate in sector-level consultative meetings with various stakeholders.

With the help of its members, BDMA strives to support communities through various programmes, such as supporting the health sector through its member Diacore, which organises Botswana’s most popular and largest marathon – the Diacore Gaborone Marathon. Alongside this, BDMA recently donated cars to Child Line Botswana

as part of its CSR project, and its members donate blood to the Botswana National Blood Transfusion Services to support the shortage of blood within the country.

BDMA organises some of Botswana’s most exciting sporting events, such as the BDMA Football League, BDMA Cricket League, and BDMA Netball League. These matches help build employee morale and develop team spirit. Indeed, during a recent football final, the company had over 1,000 spectators watching the game, and employees stayed back for the sundowner party.

Apart from this, BDMA hosts a few networking events and workshops where the members get to network and learn from the experts within the industry.

MO: Finally, how do you see the industry developing over the next five years?

BDMA management team

“ O U R C O R E VA L U E S A R E D E V E L O P I N G A C U LT U R E OF PROFESSIONALISM, I N T E G R I T Y, T R U S T, CONTINUOUS LEARNING, C O L L A B O R AT I O N A N D C O N S U LTAT I O N A M O N G S T THE INDUSTRY MEMBERS A N D S TA K E H O L D E R S ” – S I D DA R T H G OT H I , C H A I R M A N , B O T S WA N A D I A M O N D M A N U FA C T U R E R S A S S O C I AT I O N

SG: The role of BDMA is to ensure the industry is functioning smoothly and, therefore, to resolve any industry issues efficiently and appropriately. We also conduct industry-related workshops occasionally for the purpose of knowledge sharing and shaping up the industry for a better future.

We hope to see more beneficiation of the diamonds within the country and higher localisation through the inclusion of skills transfer and a greater citizen workforce.

Apart from this, a reduced carbon footprint for diamonds using green energy and recycling is something that is crucial within the industry. Whilst a more businessspecific development would be value-adding Botswana Diamonds jewellery manufacturing.

BDMA is a critical partner in boosting the success of the diamond industry in Botswana. The services it provides to its members help to develop businesses by finding optimal solutions and answers for any challenges. It organises regular meetings and workshops with the relevant authorities for its members and discusses industrywide solutions and facilitates knowledge transfer to its stakeholders.

BDMA has always represented those in the diamond cutting and polishing industry through advocacy to advance the industry’s interests by giving one voice to members.

BDMA Tel: +267-75199501 official.bdma@gmail.com bdma.org.bw Mining Outlook Issue 4 | 11

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