Kabo Mokgoabone
25 March 2008
De Beers Group Managing Director, Gareth Penny, said last week that the multi-million Pula state of the art Diamond Trading Company Botswana (DTCB) came as business opportunity to Botswana, dismissing suggestions that it is a 'humanitarian' project.
Responding to media questions after the handing over of the P471 million building to Minister of Minerals, Energy and Water Resources, Ponatshego 'PHK' Kedikilwe, last Tuesday, Penny said setting up DTC Botswana was a result of strides made by the country that was one of the world's poorest at independence. "As countries develop, they present opportunities," Penny told local and international press.
"The world evolves, and Botswana has moved from a low-income to a middle-income country due to a high level development though it was the poorest at independence," said Penny.
Penny, who heads the world's largest rough diamond producer, had his back against the wall when asked to explain why De Beers did not set up DTC Botswana ten years before.
He said that they also decided to set up DTC Botswana because, compared to other cities around the world, including London, Antwerp or New York, 'cost differentials were amazing here'.
Penny said comparative labour costs and property overheads are lower here compared to other diamond centres, and it will be cheaper because Botswana is the largest producer of rough diamonds. Supply chain management will also be easier because diamonds from the mines will easily be transported from the mines to DTC Botswana and De Beers' client sight holders cheaply.
"Instead of going to London and back, it will be easier here. We are doing it because it is a good business. It is an efficient model," he said.
Botswana produces over 34 million carats of diamonds annually from its four mines of Jwaneng, Orapa, Letlhakane and Damtshaa. Other countries where De Beers operates like Namibia and Canada have small carat output averaging between two and three million carats annually. Penny added that they are almost embarking on similar projects in countries where they operate. Penny added that comparatively, their clients have found out that engineers in Botswana are cheaper as compared to other centres because nowhere in the world will you pay an engineer $1,000 or P6,000 monthly.
DTCB is expected to sort and value 30 million carats of diamonds annually, making it the largest plant in the world. However, the MD acknowledged that there are risks with creating downstream industries in Botswana, South Africa and Canada.
He, however, says that commitment will be important, especially in making sure that the workforce is productive.
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