Major opportunity for the diamond business to return to old strengths, says luminary
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Botswana is seeking a greater interest in De Beers, and Angola is seeking an interest too. To the mind of diamond luminary Martyn Charles Marriott, this could be an opportunity to return to old strengths and disciplines.
In an article on the website of the International Diamond Manufacturers, Marriott cautions Botswana about going it alone and falling into the trap of yet again putting all its eggs into one basket. Marriott notes that the current deal Botswana has with De Beers is fantastic in that 80% of mine profits go to Botswana - a level that far surpasses anything in the mining industry anywhere in the world.
Marriott expresses the view that the debate now under way about the future of De Beers presents an opportunity for a return to the discipline and control of the natural diamond market.
Many recall that the economic viability of the diamond industry in the days when it had a stockpile and a quota approach, which kept supply and demand in crucial balance.
In addition, large sums money were spent on the unforgettable Diamonds are Forever advertising campaign and the creation of the diamond engagement ring tradition that spread throughout the world.
Collaboration is what gave diamonds their old strength; fragmentation is what has created their current weakness.
Marriott recalls how collaboration led to flow of alluvial diamonds from West Africa being absorbed by the diamond buying offices that were created at source.
In addition, Russia recognised the way in which the approach was of benefit to all on the supply chain from diamond miners to diamond cutters, traders, and consumers.
As the then manager of the De Beers Dicor operation in Sierra Leone, it was Marriott who persuaded the government of that African country of the benefits and his departure from De Beers coincided with the discovery of diamonds in Botswana, where he played a diamond consultancy role from 1970 to 1983.
Botswana was persuaded about the way in which the Central Selling Organisation system could help its economy "with the caveat that the diamonds had to be properly sorted and valued".
The production level at Orapa also had to be increased to the level that helped Botswana secure a favourable quota.
It was also Marriott who initially proposed that the future development of the mines in Botswana should be by an equally shared 50/50 company.
For more than a dozen years, Marriott was a member of Botswana's negotiating team with De Beers that secured the very high level of profits that would accrue to the Botswana government from the development of its diamond mines. During the development of the Jwaneng mine by the then joint company, he was asked to co-ordinate Botswana's inputs into the project.
Interestingly, in 1980, even the Australians were also persuaded about the merits of the Central Selling Organisation for the Argyle mine.
"From 1985 through to the end of the century I was heavily involved in the restoration of the Angolan diamond industry as consultant and valuer to Endiama," Marriott recalls in the article in the latest International Diamond Manufacturers publication.
"In this instance, as the production there was then small, I advocated sales by tender initially, and we built up a successful sales procedure from there, which was eventually undermined by corruption."
He also played an active part in the establishment of the Kimberley Process.
"Unfortunately, in 1986 things in the diamond world began to fall apart. Argyle and De Beers ceased their co-operation. The Russians became more and more independent and this was followed by the Canadian mines marketing their production separately."
The Central Selling Organisation was no longer in...