Botswana’s diamonds

Press, 17 April 1982, Page 14

Botswana’s diamonds

From the “Economist,” London

Botswana has begun to question the workings of De Beers's Central Selling Organisation, following Zaire’s successful UDI from this near-monopolist

of the world diamond trade .last year. Recession has weakened demand for diamonds. So De

Beers has cut the price it pays producers, and asked them to stockpile precious stones. De Beers’s own stocks have doubled in the past year as it tried to stem falling prices. Zaire, by contrast, has managed to keep prices of all its grades of diamonds above the Central Selling Organisation’s prices since it broke with De Beers in 1981.

Botswana, which mines 15 per cent of the world’s diamonds, is likely to overtake South Africa as the biggest producer by the end of the decade. Diamonds are the brightest sparkle in Botswana’s economy. The decision by De Beers to cut prices and purchases from Botswana in 1981 halved Botswana's diamond revenue.

Work is still going ahead, however, on a new diamond mine, the Jwaneng, which will soon be producing 3.5 million carats a year. With expansion planned at the Orapa (Botswana’s first diamond field) and another deposit nearby, Botswana's diamond output should rise above 10 million carats a year by the mid-1980s. The Botswana Government has been happy until now with Debswana, its 50-50 joint venture with De Beers. Debswana owns the country’s diamond mines and markets through the Central Selling Organisation. De Beers guarantees to buy a minimum amount of diamonds when times are bad, as they are now.

Mines in Namibia and Angola, bound by similar agreements to De Beers, have also had to cut production to avoid stockpiling diamonds which De Beers will not buy. Officials in Gaborone, Botswana’s capital, complain that their stocks of diamonds are huge and their cash is short.