In its 125-year history, De Beers Group has become synonymous with diamonds. The world’s leading diamond company has evolved to become the standard setter across the diamond value chain, from mining to retail.
At the heart of the company’s success is its unique partnership with the government of Botswana, home to the world’s richest diamond mines. “Botswana really is the beating heart of De Beers Group. De Beers has been in Botswana for 50 years and we are in an equal partnership with the people of Botswana,” says David Prager, the company’s executive vice-president for corporate affairs.
That equal partnership is quite literal. Botswana gained independence from the UK in 1966; within a year, the first great diamond caches had been found. The country’s two great diamond mines, Orapa and Jwaneng, were founded shortly after and have been in operation ever since under De Beers’ and the government of Botswana’s joint company, Debswana. De Beers and the government each own 50% of the company.
In recent years, that relationship has evolved to bring even more of the diamond value chain to Botswana. “We understood that for Botswana it was critical to use the diamond wealth it had been endowed with to grow and diversify its economy, to the extent that we could support that aspiration by moving our sales operations to Botswana,” says Mr Prager.
In response to Botswana’s drive to increase domestic benefits it takes from the diamond industry, De Beers moved its entire diamond sales operation from London to the southern African country in 2013. “It’s not been easy, it takes transfer of skills, it takes transfer of technology, but we’ve committed to making sure that we’re training local Botswana citizens to take over jobs,” says Mr Prager.
In order to accomplish this, De Beers set up a training academy in country for diamond professionals. The company now employs about 230 people working in its sales business in Botswana, which attracts the world’s leading diamond producers for 10 site sales a year. This is in addition to the 7000 people already working for the Debswana joint venture. De Beers estimates another 35,000 jobs are created indirectly by its operations.
“It is also about finding skills training for those 35,000 people out in the economy. So we look at SME training programmes, helping them get access to capital, finding opportunities for new, young entrepreneurs to enter the business pipeline,” says Mr Prager.
If diamonds are forever, economic trends are not. The global economy is facing headwinds, including a marked slowdown in China, hitherto one of the world’s fastest growing markets. So far, it has not affected the outlook for diamond sales. “As the Chinese middle class matures, we’re seeing greater demand from China, which is now the world’s number two market. India is starting to come back as a number three market,” says Mr Prager. Indeed, De Beers remains bullish on China. “[The US is] still more than 50% of the market but we see really positive signs coming from China,” he says.
There is also the challenge from the growing market in laboratory-grown synthetic diamonds, which retail at 30% to 40% less than mined diamonds and do not have the diamond industry’s history of conflict diamonds.
Seeing the trend, De Beers has gone into the synthetics business, adding synthetic production company LightBox to the group in 2018. However, Mr Prager believes consumers distinguish clearly between natural diamonds and synthetics. “They’re totally separate. De Beers is a natural diamond company and De Beers will always be a natural diamond company,” he says. “[Consumers] told us that they saw a place for lab-grown diamonds in the market as fun fashion jewellery, and we saw that demand wasn’t being satisfied. [However] the price of natural diamonds continues to go up and that’s only natural because they’re rare and they’re finite. Every one we find is one less we can find tomorrow.”