De Beers is said to have failed to assure Botswana that it will not be involved in the manufacturing of synthetics.
The Botswana Institute for Development Policy Analysis (BIDPA) was quoted by Southern Times as saying in a report that the government of Botswana had sought assurance that De Beers would not enter the synthetic quality gem market.
As a result, there was an agreement on synthetics signed between De Beers and Botswana, which provided that in the event that the diamond giant enters the gem quality synthetic market, it would market the gems in a 75-25 percent joint venture with Gaborone, claimed the report.
BIDPA said a joint venture with De Beers in the production of synthetic gem quality diamonds may lessen losses that Botswana would suffer as a result of the widespread use of synthetics in the jewellery industry.
However, this would likely fail to compensate for the loss of economic rents in the mined diamond sector.
“This is because mining of rare gems such as diamonds has traditionally brought significant rents whereas an industrial process which is readily replicable will in the long-term drive only normal profits,” BIDPA said.