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BOTSWANA DIAMOND CENTRE

NICKY OPPENHEIMER'S STATEMENTS MARCH 2008. What we are embarking on is nothing less than one of the largest transfers of skills and commercial activity to Africa ever seen. The Diamond Industry's centre of gravity is shifting and tonight we see it shifting here". Nicky Oppenheimer, 18th March 2008 at the Occasion of the opening of DTC Botswana..

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BOTSWANA DIAMOND CENTRE

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    1. BOTSWANA DIAMOND CENTRE DR. AKOLANG RUSSIA TOMBALE DIAMOND HUB COORDINATOR

    2. NICKY OPPENHEIMER’S STATEMENTS MARCH 2008 What we are embarking on is nothing less than one of the largest transfers of skills and commercial activity to Africa ever seen. The Diamond Industry’s centre of gravity is shifting and tonight we see it shifting here”. Nicky Oppenheimer, 18th March 2008 at the Occasion of the opening of DTC Botswana.

    3. ROLE OF DIAMOND HUB Position Gaborone as one of the World’s major Diamond Centre through the establishment of downstream diamond activities beyond diamond production and Cutting and Polishing. This involves positioning Botswana as a Hub for: Diamond Marketing Rough and Polished Diamond Trading Research and Development in diamond Jewelry and in other diamond business aspects Other downstream diamond activities

    4. TRANSFORMING BOTSWANA FROM A LEADING ROUGH DIAMOND PRODUCER BY VALUE TO A DIAMOND CENTRE  Current Status Desired Future Status

    5. DIMINISHING ROLE OF DEBSWANA MINES In about 10 years’ time around 2017 or 2023 REVENUES to Government will be severely reduced due to Botswana’s main diamond mines producing from underground leading to high costs of production and low tonnages. To fill the Government revenue deficit gap, the country should embark in mineral beneficiation strategy as an input in economic diversification and industrialization.

    6. DEFINITION OF MINERAL BENEFICIATION Mineral Beneficiation entails the transformation of a mineral (or a combination of minerals) to a higher value product, which can be consumed locally or exported. The term is used interchangeably with VALUE ADDITION or Downstream beneficiation which includes both downstream and side-stream linkages.

    7. VALUE OF DIAMONDS CUT AND POLISHED IN BOTSWANA In 2004, Diamond Cutting and Polishing (otherwise known as diamond manufacturing) was scaled upwards from US$ 30 million worth cut locally to reach US$ 550 million by 2010. Serious problems confront this industry in Botswana thus demonstrating that diamond cutting and polishing could not be the core of our diamond beneficiation.

    8. COSTS OF OPERATION IN DIAMOND MANUFACTURING IN BOTSWANA Diamond manufacturing costs in Southern Africa and in Botswana ranges from US$35 to US$ 70 per carat compared to India (US$ 10 per carat), China (US$ 17 per carat) and Thailand (US$ 20 per carat)

    9. ESTABLISHING THE DIAMOND TRADING PLATFORM One of the recommendations from the Presidential Task Force on countering the impact of the global recession on the economy and strategic positioning of Botswana said “Strategic Partnerships should be formed with specific view of maintaining both diamond prices and sales.”

    10. ESTABLISHMENT OF DIAMOND TRADING PLATFORM Combining the search for Strategic Partners to maintain both diamond prices and sales with the search for new sources of revenue and the need to increase our benefits from the current 3% to a much bigger state in the total diamond industry chain Rough and Polished Diamond Trading plays a critical role as in Belgium, Israel and Dubai.

    11. DEFINITION OF STRATEGIC PARTNERS Strategic Partners are those companies and individuals who are currently sourcing diamonds elsewhere and selling them in major trading centres of Antwerp and Israel. They have been encouraged to re-locate all or part of their diamond trading business to Botswana. A package of incentives plays a critical role in attracting these industry players.

    12. ANCILLARY INDUSTRIES (FINANCIAL SUPPORT ) Diamond Industry requires specializied financing: Overseas Private Investment Corporation (OPIC) US$ 250 Million guaranteed financing. ABN-Amro Bank re-location from Republic of South Africa. Working on private equity fund with Government support

    13. ANCILLARY INDUSTRIES (SECURE ENVIRONMENT) Construction of Secure Transfer Facility (STF) at Sir Seretse Khama International Airport Diamond Technology Park adds to critical infrastructure required in the downstream diamond business Major diamond shipping company (BRINKS) operating in Botswana. Establishment of Gemological Institute of America (GIA).

    14. BENEFITS OF A SECURE ENVIRONMENT Low insurance premiums for trading and associated support companies Support the “Botswana Diamond Centre Brand” reputation as a safe and low risk environment to do business Attraction to the supply chain infrastructure to locate to Gaborone (Banking; IT, Legal etc) Provides a marketing differentiator from other trading centres.

    15. DIAMOND CENTRE BENEFITS ON THE ECONOMY Multiplier effects and linkages to other sectors of the economy Could impact on tourism both on tourist expenditure and increased volumes of visitors. Movements of diamond dealers in and out of the country would impact on air travel and hospitality industry. Diamond Hub Business Plan forecast about 1.7% increase on GDP.

    16. OPPORTUNITIES FOR CITIZENS IN DIAMOND HUB PROJECTS Sustainability of Diamond Cutting and Polishing in Botswana requires development of small citizen companies (cottage industry) that could be mentored to grow. Downstream diamond industry is dependent on specialized financing. Thus local financial institutions should find ways of participating.

    17. OPPORTUNITIES CONTINUED Downstream diamond industry especially cutting and polishing uses specialized equipments and technology. Servicing and maintaining of such equipments and technology requires linkages with equipment manufacturers to secure dealerships. Development of infrastructure is critical to house diamond activities.

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