Bogolo Kenewendo, Botswana’s minister of minerals and energy, spoke with JCK after being the guest of the honor at the Jewelers Vigilance Committee’s annual luncheon in New York on March 14. Here, the 38-year-old economist, who was appointed to her position in November, discusses the changes that will come from Botswana’s recently signed contract with De Beers, her view on lab-grown diamonds, and Botswana’s plans for reviving the natural diamond market.
What has been your impression of the lunch today, and of the U.S. market in general?
The industry knows Botswana, thankfully. What I’ve seen is generally the American consumer doesn’t know about Botswana. I did a market walkabout to find out if [jewelry salespeople] know where their diamonds come from, and I think we still have a little bit of work to do there. Even in the biggest retailers, there was a little confusion about Is it a South African diamond? And I got to a point where I said, “Surely, South Africa doesn’t have that much diamond production.”
But at this luncheon it’s been a really positive response. Everybody is talking about the relief that came with us concluding the agreement with De Beers and the signing that happened two weeks ago, and that hopefully now we will work on partnering with the industry in the development of a strategy for marketing and consumer education, and just ensuring that there’s real leadership in the industry.
The deal calls for more diamonds to be sold by Okavango Diamond Company (ODC)—which has been selling 25% of [De Beers-Botswana joint venture] Debswana’s diamonds. How much will that increase?
Upon signing, [the number rose to] 30%. After five years, it will be 40%. At the 10th year, it will be 50/50.
Will ODC sell in a different way than it does now?
We are working on different strategies. We’ve been selling through auctions, and some of them have been almost distortive in the market. We are reviewing contract purchases and maybe some direct sales. So we’ll be thinking through strategies as our entitlement increases.
You spoke during the luncheon about some kind of Botswana hallmark. Will that be for ODC?
Not necessarily just from ODC, but even through De Beers, because it’s still marketing 70% of our diamonds. And what we’ve been mulling is something like the Canadamark, the polar bear diamond. It may be an elephant diamond or a zebra diamond or Okavango diamond—something that can tell the consumer about ethical sourcing and responsible mining that’s associated with the diamond.
The new contract includes provisions for a joint marketing fund. How will that work?
We are setting up a high-level steering committee and marketing board that will do that. We see an opportunity because Botswana makes such a good case study to lift the entire natural diamond market up. So as we market, we tell the diamonds-for-development story, we tell the Botswana story, and we ensure that we are doing category marketing quite strongly as well.
What’s happening with HB Antwerp? Last year, Botswana was poised to acquire a stake in the company.
We do not have any contracts or agreement with HB.
Do you anticipate one?
I don’t expect to have one. There are no ongoing negotiations.
On stage at the luncheon, you said Botswana has 58 diamond-cutting factories. There’s talk some are closing.
They haven’t closed. Some have paused, yes, but some have actually not even downsized, because they are anticipating that the market will come back up.
Many in the industry say it’s not efficient to manufacture in Botswana. Can it become more efficient?
We’re working on those efficiencies. But you know it’s attractive when you get beneficiated stones.
How do you see lab-grown diamonds?
When I first took over as minister of minerals, I was very concerned about synthetic diamonds and felt they were cannibalizing the diamond industry. But over the last couple of months, we’ve seen that the industry is rebounding. We have seen places like the Middle East returning back to natural diamonds. We are seeing in India some return to natural diamonds.
Even in the U.S., there’s been marginal growth in revenues associated with natural diamonds, when a few months ago everything was going down and was in the red. So being able to see anywhere between 6% to 13% growth in natural diamonds is giving us hope that there will be stabilization in in the market.
We have an opportunity to counter the narrative that a synthetic is exactly the same as a diamond. Because they are not. One is made in a factory. There were 16 million carats made in a factory by components that are mined elsewhere. That doesn’t make them a gem, right? And that brings up the rarity of a natural diamond and makes it the store of value that we have seen over the years.
We also need to say that this narrative that synthetics are greener is not true. Botswana has conserved over 30% of our land mass for conservation purposes and subsequently to have the best safaris in the world. Let me just throw that in. [Laughs]
But we can also point to the societal impact that diamonds have created [in Botswana]. And the governance structure. [Botswana is] the longest-running democracy in Africa. Nonstop. No civil war, nothing. And when [the government] changed parties last year, the next day everybody was back at work like nothing happened.
Anglo American has said it wants to sell De Beers. Is Botswana likely to take a larger stake than its current 15% of the company?
We are mulling the opportunities that exist. We just signed this agreement with De Beers, which tells the market and the business that we have a long-term interest in the business. And we want to ensure that relevance in the market continues. As part of that, Botswana may look at its equity play. So we’ve set up a steering committee with Anglo and De Beers to look at the options that exist.
Do you have any ideas about who would be a good owner for De Beers?
No, we don’t have an opinion on who would be a good owner. What we care about is shared values. This is what the agreement is about—shared values, the development for Botswana, capturing value into Botswana, and then providing the stability and confidence that the market needs. If that means [De Beers being] a company that is publicly listed, then so be it.
What did you think of the Anglo’s decision to write down De Beers value by $2.9 billion?
It’s not surprising given that the market has been depressed for 18 months.
For 25 years, the industry has tried to tell the “diamonds do good” story. It hasn’t really broken through. Why not?
The main challenge has been traceability—being able to say, “This is a Botswana diamond.” We know one in every three diamonds is from Botswana, and we’re going to enhance the traceability aspect to be able to share that story.
So we hope our investment in traceability, our investment in marketing with De Beers and other partners, will be able to strengthen our narrative and make sure that the market understands us better. We would like to host people in Botswana to come see for themselves. For those that can’t make the long journey, we’ve been putting out a lot of material. You get to see the diamond story of Botswana and hopefully get as inspired about the work that’s happening as we are.
One thing I’ve always noticed is that industry executives like [De Beers CEO] Al Cook can talk about Botswana but people from Botswana tell the story the best.
I’m extremely passionate about this. While this is a luxury to many, to us it’s literally the author of life. It has given me, personally, a future. We want it to continue giving a future to many others, which is why we’re so passionate about investing not only time but adequate resources to bringing back the consumer and everybody in the mid- to downstream.
Did anything in particular lead to the breakthrough in the contract signing? It took longer than people expected.
We felt the need to bring this to a conclusion. The president gave me a mandate of “You have one hundred days to do this.”
What we understood is we need to secure as much value as we can for Botswana. But we also need to ensure that there is an industry for us to go back to. And if we focus too long on just the internal, we’re going to miss the ship and there will be no industry. So we needed to get back to the hard work of rebuilding the industry.
Anything else you want readers to know?
Diamonds are forever. Let’s get back to investing in the product.
(Top photo courtesy of the Jewelers Vigilance Committee)
