De Beers Botswana offers supplies in tight market

By Eric Onstad

LONDON (Reuters) - New diamond cutters are setting up shop in Botswana, the world's biggest diamond producer, to gain supplies in a tight market even though margins may be lower there, a top official of De Beers said on Tuesday.

De Beers, which accounts for around 40 percent of global rough diamond supply, is due to launch a new local marketing arm in Botswana this month to help boost the country's jewellery sector and create jobs.

The move reflects an effort by African countries to move beyond exporting raw minerals and get a slice of lucrative downstream activities.

"For the first time, goods will be sorted, valued and mixed in Botswana," Sheila Khama, chief executive of De Beers Botswana, told Reuters Global Mining Summit in London.

"The move to Botswana is significant in many ways... it moves the relationship between De Beers and the government downstream."

De Beers and the Botswana government are already 50-50 partners in Debswana, which mines the bulk of the nation's diamonds, and will also jointly own the new marketing arm.

Khama acknowledged that Africa cannot compete with cheap labor in China and India, major diamond cutting centers, which is likely to limit the size of African cutting industries.

African cutting factories will focus on larger, more expensive stones for which the labor component is a smaller proportion than low-value gems, a speciality of India.  Continued...