Diamonds are forever, but maybe the marriage between Botswana and De Beers is on the rocks

 Michael alternate Thursdays

Gaborone in the early days

When Botswana became independent in 1966, it was a sparsely populated, poor country the size of France, mostly covered by the Kalahari Desert. Before that, Britain had governed it as the Bechuanaland Protectorate. The British had little interest in their "protectorate", and didn't even bother to set up a capital inside the country - it was administered from Mafikeng in South Africa. Gaborone was an insignificant town, and the country was basically a subsistence farming economy.

Kalahari landscape

What changed all that was the discovery of diamonds. There are stories that De Beers knew about the huge resources in Botswana before independence and kept it quiet at Seretse Khama's request, but that may be apocryphal. What is beyond doubt is that the opening fifteen years later of Jwaneng, still the world’s richest diamond mine in terms of gemstones,  completely changed Botswana’s economy and its future. (Jwaneng and its stream of gemstones played a key role in our first Kubu prequel Facets of Death.)

Jwaneng is a huge open pit mine about an hour's drive west of Gaborone. It produces more than 10 million carats of raw diamonds a year. If all those diamonds ended up as jewelry, they would retail for about $150 billion! As a 50% partner in the Debswana joint venture, Botswana earns huge revenue. It also holds 15% of the De Beers company and receives dividends and taxes.

The pit at Jwaneng

However, things have changed. Revenues have fallen with diamond sales dropping during recessions, costs have risen, and politicians are now thinking about where to get more money. The arrangement between Botswana and De Beers is reviewed from time to time, but has always been extended with minor tweaks and a few bonuses thrown in. This time may be different, but it's a high stakes game. Diamonds constitute two thirds of Botswana's exports and 20% of GDP.  However, the net revenue for raw diamonds pales by comparison with the revenue from retail diamonds, and De Beers pockets most of that.

An important factor is that De Beers is by no means as strong as it used to be when the marriage started. There are other big suppliers to the market - BHP in Canada, for example. In the past, De Beers was essentially a monopoly, and if you didn't play by its rules, you didn't get any diamonds. When I worked for their parent company, Anglo American, twenty years ago, one was not allowed to travel to the US on any sort of business related trip because of the anti-monopolies laws there. A business trip could be used as evidence that De Beers was doing business in the US and therefore could be sued for infringing US law.

The current Botswana president, President Masisi, has changed a lot of things. Starting out as Ian Khama's protege, he worked his way up to deputy president and then president. Almost his first act was to dump Khama, essentially accusing him of corruption. Khama now lives in exile in South Africa. Now, De Beers is in Masisi's sights. He has said he's willing to walk away from the agreement altogether, and has fired a warning shot across De Beers bows by purchasing a substantial interest in one of the key Belgian gem traders, HB Antwerp. That could give Botswana a direct sales route to the consumer cutting out De Beers altogether.

Thinking about Kwei's comments yesterday, one can sympathize with Masisi's desire to run his own economy, but in the end, I think they'll make a deal. The diamond mines are central to Botswana and it's not easy to manage and develop a big mine. Botswana and De Beers need each other. On the other hand, politicians worldwide seem less and less concerned about what their countries need and more and more concerned about what plays well for the next election. We'll see.

Facets of Death - Diamonds are forever ... or are they?

Michael and Stanley - Publication Day!

The new Detective Kubu mystery out today
"...easily one of the best heist novels I’ve read since Gerald Browne’s classic 11 Harrowhouse"
Bookpage starred review

Gaborone in the early days

When Botswana became independent in 1966, it was a sparsely populated, poor country the size of France, mostly covered by the Kalahari Desert. Before that, Britain had governed it as the Bechuanaland Protectorate, not even bothering to set up a capital inside the country. It was administered from Mafikeng in South Africa. Gaborone was an insignificant town, and the country was basically a subsistence farming economy.

Kalahari landscape

What changed all that was the discovery of diamonds. There are stories that De Beers knew about the huge resource in Botswana before independence and kept it quiet, but that may be apocryphal. What is true is that the development fifteen years later of Jwaneng, the world’s richest diamond mine,  completely changed Botswana’s economy and its future.

Jwaneng is a huge open pit mine about an hour's drive west of Gaborone. It produces more than 10 million carats of raw diamonds a year. If all those diamonds ended up as jewellery, they would retail for about $150 billion! As a 50% partner in the Debswana joint venture, Botswana earns huge revenue.

The open pit mine at Jwaneng

But much could have gone wrong. Political instability would have turned off investors. Nationalisation might have led to the industry’s collapse (as it did with the copper mines in Zambia). Or security issues might have destroyed the country’s credibility. And that brings us to the new Detective Kubu novel, Facets of Death, out in North America today.

Huge rock moving vehicles

There are big differences between Facets of Death and the previous Kubu novels. It’s a prequel set about twenty years ago (ten years before A Carrion Death), and it starts with Kubu’s first day at the Botswana Criminal Investigation Department—trying to learn the job and build a role for himself. He’s given the job of discovering why suitcases are disappearing from Gaborone Airport—something minor to cut his teeth on. But almost immediately, there’s a huge heist of 100,000 carats of raw diamonds being transported from the Jwaneng diamond mine to Gaborone. Even as raw gems that's at least $10 million worth.

Rough diamonds

Not only are the diamonds stolen, but the driver and a guard on the security vehicle are cold-bloodedly executed. The police are initially confident of catching the perpetrators before they leave the country, but that gives way to despondency as time passes. It’s exactly the sort of security breach that could lead to a collapse of confidence in the vibrant new Botswana economy. So the stakes couldn't be higher, and the powers that be want the case solved and the culprits brought to justice very quickly, or heads are going to roll. The commissioner of police, government ministers, and even the chairman of Debswana are looking over the CID’s shoulder.

Cash in transit vehicle after a heist in South Africa

Kubu is thrown into this maelstrom before he’s even settled into his office, let alone settled into his job. His new boss, Assistant Superintendent Jacob Mabaku (later the director of the CID) identifies him as having special talents and pulls him onto the case. But even as Mabaku and his team make progress, the robbers seem to be one step ahead. Everyone who knew the mine's security plan is a possible suspect, including the director of the CID and the owners of the mine. And Mabaku and Kubu can't even trust the South African police. 

We had great fun writing the prequel and playing with this “what if” scenario. As far as we know, Debswana has never had a serious heist of this nature, but then again they are very secretive. Maybe it happened, but they kept it dead quiet…