GABORONE, Botswana — The world’s largest producer of diamonds wants more bang for its bling. A company launched Tuesday will market and sell about a third of Botswana’s diamonds to manufacturers who have set up cutting and polishing factories in the southern African country. Very little diamond polishing and cutting, which increases a diamond’s value by 50 percent, has been based in southern Africa. The new Botswana company will one day host the largest and most sophisticated rough diamond sorting and valuing operations in the world, handling more than 34 million carats a year, creating more than 3,000 jobs and bringing in much needed foreign currency, diamond giant De Beers said.
De Beers and the Botswana government own the company together, part of a regional move to ensure mineral-rich countries benefit more from their natural resources.
“We think countries are right to aspire to use as much of their natural resources to generate more value,” said Sheila Khama, chief executive officer for De Beers Botswana, in which the Botswana government has a 15 percent share. “And it serves our business interest” to support such moves.
The new company is expected to sell $375 million in rough diamonds this year and $550 million by 2010.
All the sorting and valuing of diamonds produced in Botswana by Debswana, a joint venture between De Beers and Botswana’s government, will be now done at the $83 million state-of-the-art plant in the capital, Gaborone.
A similar diamond trading company was set up last year between the Namibian government and De Beers. Last month South Africa established the State Diamond Trader, which will acquire 10 percent of locally produced diamonds for resale on the local market.
Southern Africa accounts for more than 40 percent of the world’s rough diamond output — Botswana alone has 22 percent of the market, worth about $3 billion a year.
Yet Botswana, a country almost the size of France or Texas with a population of about 1.8 million, has an unemployment rate of about 20 percent. Nearly a quarter of the population lives on $1 a day and about a quarter of the population is HIV positive, putting even more pressure on the economy.
Kabo Ramatludung, a 23-year-old training as a cutter in Gaborone, had been selling puppies to earn money. Diamonds offer a better future, said Ramatludung, who has a younger sister to look after, and no parents.
If he passes his six-month training period, he will be given a job.
Diamonds “are so bright and attractive. I always wanted a chance to work them,” Ramatludung said, the light glinting off his fake diamond earring.
Traditionally diamonds have been cut and polished in centers such as Antwerp, Belgium and Tel Aviv, Israel. But increasingly less cutting is done in Europe, with lower-cost centers opening up in India and China.
With high labor costs, southern Africa was not seen as competitive and there was initial resistance by the diamond industry to regional governments’ calls to bring more of the diamond industry to the source.
However, governments have insisted. Two years ago, when it came time for De Beers to renegotiate its mining licenses in Botswana, one of the conditions was to help develop local processing industries.
New technologies have made processing diamonds less labor intensive and made local operations more viable.
New York-based Martin Rapaport, whose Diamond.Net is a leading source on diamond trading and pricing, said the idea of sorting and processing in Botswana is excellent, but questions about cost-effectiveness remain.
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