Namrata Kath Hazarika | 18 Jun, 2010

India may soon be able to source rough diamonds directly from Botswana, the largest diamond producers in the world, cutting out all the middlemen, as the two nations are chalking out modalities on the issue, said Botswana's Vice President Mompati S Merafhe Thursday in New Delhi.

"We are negotiating with the partners on what can be possible. We need private partners for collaborating or working closely between both the nations.....We are discussing on the same and trying to work on the modalities on what can be done on the issue," Merafhe told reporters on the sidelines of a CII event when asked about India's ongoing effort to establish direct relationships between Botswana in terms rough diamond supply.

Early this year, Indian Vice President Hamid Ansari visited Botswana with an effort to lay the ground work to faciliatate more procurement of rough diamonds by Indian companies from  Botswana diretly, rather than through middlemen.

During the visit, an agreement was inked between the two sides and it was expected that actual direct sourcing of uncut diamonds from Botswana would be possible after two years when the then existing contract for distributing mining and rough diamond came to an end.

The Botswana government also showed interest in diversifying the sellers of its diamonds, rather than going through a single company as they saw that De Beers was unable to take all the diamonds mined due to a decline in demand during the global economic slowdown. 

At present, Botswana's diamond mining industry is dominated by 'Debswana', a  joint venture between De beers and the Botswana government. It is expected that if India could establish direct relationships with diamond supplying country, it will definitely provide potential growth for the Indian diamond manufacturers in the near future.

Commenting on the issue, CII's South Gujarat Zonal Council Chairman, Aagam Sanghvi said that Indian diamond industry has potential interest in Botswana and if the rough diamonds from Botswana to India come directly, it will assist in value addition.

"We are aware that over 50 percent of the trade is controlled and managed by the Indian companies. It is just that we are not being able to facilitate and had an arrangement for rough diamonds." he said, adding both the countries can work collaboratively in the diamond manufacturing business. 

India has long been trying to establish systems for the direct imports of rough diamonds from diamond-rich African countries including South Africa, Botswana, Namibia and Angola to support its diamond cutting and polishing industry, which has a 65 percent global market share in diamond processing and strongly dependent on imports of rough diamonds.

At present, rough diamonds are procured through a variety of sources with the bulk of it coming into India through mining giants like De Beers, Alrosa, Rio Tinto and private miners in South Africa and Canada.

According to some recent news reports, China has been making fast inroads into African nations to secure rough supplies, mainly to nudge India from the African procurement zone. Some news reports have even claimed recently that Zimbabwe's government is secretly giving mining permits to soldiers of the Chinese military, challenging the Kimberly Process, which promotes conflict-free diamond mining and production.