Synthetic diamonds threaten Botswana’s mining-based economy, says former minister

GABORONE – The expansion of the global synthetic diamond market poses a threat to the economy of Botswana which depends on the mining and sale of the natural mineral, a former government official has warned.

Addressing a gala dinner of the Botswana Institute of Chartered Accountants in Gaborone on Monday, former Minerals, Water and Energy minister David Magang said the fact that top diamond miner De Beers was preparing to join the flourishing synthetic diamond market meant there would soon be limited market options for the Botswana diamond.

“Indications are that De Beers is about to enter the synthetics market too to peg its claim on the flourishing market. Clearly, synthetics represent one of the greatest threats to Botswana’s economic well-being for the ramifications are that even if our mines were to continue to be operational for the next 100 years, no one would buy our diamonds if synthetics became fashionable,” Magang said.

Magang said many natural diamond producers were gradually shifting to synthetic diamonds, which were fast becoming “fashionable” and earning dealers up to $9-billion a year. Further, he said the rising capital and expenditure costs of operating natural diamond mines meant that with time, there would be a decrease in diamond revenue for Botswana.

He said while it was generally agreed that Botswana’s diamond mines would remain productive at least until 2050, there had been a 40% drop in diamond prices, a closure of mines and the loss of over 1 000 jobs in the industry over the past three years.

Despite concerted government efforts to diversify the economy from total dependence on diamond sales, the mineral still generated more than 70% of the Botswana’s gross domestic product (GDP).