Indian diamond firms queue up in Botswana

Anticipating an imminent supply crunch of rough diamonds, at least half a dozen Indian diamond-processing firms have lined up investment proposals worth over $30 million in Botswana, the African country that provides over 26 per cent of global roughs.

Investments in Botswanian processing units would allow the firms to participate in the mining and beneficiation process, which will ultimately help them transport roughs to their cutting and polishing units back home.

Diamond-mining countries have tightened norms for the supply of rough diamonds to processing units abroad. Instead, they have started encouraging processing companies to participate in mining and beneficiation through initial commitment in cutting and polishing there. Indian companies engaged in diamond processing import roughs through auctions in Antwerp. They also procure roughs from the spot market with a premium as high as 10-15 per cent.

This is significant as the local processing units are facing a margin squeeze due to the high inventory, equivalent to nine months as against the usual 3-4 months of processing capacity, and huge spurt, about 15-20 per cent, in prices of roughs. India processes over 85 per cent of the global finished diamond.

The government of Botswana had recently liberalised its mining policy to attract foreign investment in the mineral-processing industry. It has also signed a Memorandum of Understanding (MoU) with mining giant De Beers and its marketing arm Diamond Trading Corporation (DTC) to invite investments in diamond processing for employment generation.

Under the new mining policy, the Botswanian government does not permit miners to export plain roughs to any destination while semi-processed rough exports are allowed.

To attract investment further, the government of Botswana has appointed Vishal Doshi, Group Executive Director of Shrenuj & Company, as honorary Consul in Mumbai.