ODC sells the full range of Debswana’s production.
ODC is a relatively new company, wholly owned by the government of Botswana. Can you explain the impetus behind ODC’s creation and how it has evolved over the past few years?
Toby Frears (TF): ODC’S establishment was one of the outcomes of the new sales agreement signed between the government and De Beers in 2011 for the marketing of Debswana’s production. The company was formed as part of the government’s broader strategy for the development of Botswana’s diamond industry. Our mandate is to provide a sustainable alternative route to market for a portion of Botswana’s diamonds and to help transform Botswana into a leading rough sourcing destination.
Since our launch in late 2013, we have become an important supplier to the market, selling significant volumes of Botswana production in a very open and transparent manner. We sell by auction, because we believe they are efficient and fair and deliver a market price through a dynamic and competitive process. We have a very open customer list and any legitimate diamond company can apply to become a customer of ODC by visiting our website and going through our registration process.
ODC aims to sell an increasing proportion of Botswana’s diamond production, reaching 15% by next year. What affect will this have on the market?
TF: In 2014, we sold a little under 3.3 million carats for $552 million. This year we sold less on account of the market conditions, but we sell the full range of Debswana’s production, and are the largest source of Botswana only diamonds to the market. Moving from 14% to 15% of Debswana’s production will not impact the broader market in any way, but does allow us to offer our customers a greater share of Botswana’s production.
How has the decrease in global diamond demand impacted ODC’s operations?
TF: ODC has been affected like any other diamond seller by the high inventory levels in the midstream and the downward pressure on rough diamond prices that we have seen since the fourth quarter of 2014. We want to be a regular source of supply for our customers and so where possible, we have maintained sales according to our sales schedule, albeit at reduced volumes in response to market conditions.
Who are ODC’s most prominent clients?
TF: We cannot disclose details of individual customers of course, but what we can say is that we have a broad and diverse customer base that represents all types of diamond business, local and international; manufacturers and dealers; small and large businesses. Our sales model does not discriminate against any business type and all our customers have an equal and fair opportunity to succeed at our sales.
How is ODC marketing the features of Botswana’s diamonds to differentiate them on the world market?
TF: It is not so much the physical attributes of Botswana’s diamonds that are important when it comes to their differentiation in the market. What is important is that customers who buy from ODC know, with absolute confidence, that the diamonds that they buy have been sourced ethically. This is an assurance that they in turn can pass on to their customers.
What is the essence of beneficiation in this process, if ODC is focused on trading rough diamonds?
TF: Our role is to help make Botswana a leading rough sourcing destination. Our scale and open-trading platform attracts buyers from around the world, who visit Botswana every sale to view our diamonds, generating business for the domestic service sector. Botswana now offers exciting buying opportunities for rough buyers with multiple producers, not just ODC, selling regularly out of Gaborone. Together with buying opportunities in South Africa, the Southern African region as a whole is now an important destination for diamond buyers from the traditional markets.
What will ODC have achieved by this time next year?
TF: We are still a relatively new organization and our focus over this next year will continue to be on consolidating our business and refining our customer offering. The market is slow, but we are using this time to develop a number of initiatives that will help us enhance ODC’s position as an important and growing source of supply to the market.
We recognize the value that some customers place in long-term supply arrangements and will continue to work towards our long-term intention to introduce supply contracts alongside our auction sales.
This interview was part of research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2016. A pre-release report on the Central African Copperbelt was released in October 2015 and can be accessed here. To participate in this report, please contact Molly Concannon at firstname.lastname@example.org