document: NEGOTIATIONS FOR a new contract between Botswana , the world 's most important diamond producer in value terms , and De Beers , the South African group which controls 80 per cent of the market for rough -LRB- uncut -RRB- diamonds , are taking much longer than expected . The previous three-year contract ended on December 31 . Some Botswana politicians want to change De Beers ' exclusive sales contract so that part of their country 's output can be sold independently of the South African group 's international cartel . This would give Botswana its own ` market window ' to see what its diamonds are worth in the free market . De Beers is resisting any change . Mr Nicholas Oppenheimer , chairman of the group 's Central Selling Organisation , argues that if Botswana chose not to sell its production exclusively through his organisation , the CSO 's ability to regulate the distribution of rough diamonds would be compromised . He said : ` Because the major -LRB- diamond -RRB- producers freely consent to sell exclusively through one channel , the CSO is able to preserve an orderly market by matching rough diamond sales closely to consumer demand . ' However , IDC -LRB- Holdings -RRB- , a London-based group which claims to be the most experienced and substantial dealer in rough diamonds independent of the CSO , suggests the CSO 's attitude ` is unreasonable and based on a conceptual argument with little substance in fact . ' In presentations to Botswana 's Minerals Policy Committee and members of parliament , IDC has been arguing that , not only was it commercially essential for Botswana to understand the real value of its diamond output , but that the country had a political responsibility to do so . ` Data accumulated independently of the CSO would put Botswana in a position to have more input into the arrangements for the sale of its diamonds , ' IDC pointed out . ` On a political level this would enable the government to answer its critics or its electors with confidence and sure knowledge when questioned about arrangements for the disposal of the country 's mineral assets . ' If Botswana were to sell 10 per cent of its rough diamond production , worth about USDollars 100m , independently of the CSO - which sells about Dollars 4bn-worth a year from all over the world - it would represent no threat to market stability , IDC said . It claims analysts have estimated that 50 per cent of De Beers ' diamond profits in 1989 came from Botswana . ` This profit is disproportionate to the sale of diamonds by Debswana -LRB- De Beers ' subsidiary in Botswana -RRB- to the CSO as a percentage of the CSO 's total sales profits , ' IDC says . ` It is not unreasonable to reflect whether the fact that Botswana is the only major producer currently selling 100 per cent of its production to the CSO has any bearing on the substantial profits made by the CSO on the sale of its diamonds . ' Other substantial producers such as the Soviet Union , Angola , Zaire and Australia do not sell all their production to the CSO and therefore have access to independent market information . IDC does have a vested interest . It already markets diamonds for producers in Guinea , Guyana , Brazil and the Central African Republic , and is offering to do some marketing for Botswana . It acknowledges that all sectors of the diamond trade welcomed the CSO 's efforts to keep the diamond market stable . But ` the fact that the CSO forms part of an aggressive , profit-motivated public company with a primary responsibility to its shareholders is often lost from view . ' De Beers says Botswana diamonds do not contribute half its diamond account profits - but it will not divulge the true figure . It suggests IDC 's arguments are flawed because they are based on an assumption that Botswana needs more market information . However , in common with other producers selling diamonds to the CSO , Botswana has appointed independent valuers who continuously monitor diamond production and the prices paid . According to the CSO , these valuers are fully informed about market conditions and the prices received for Botswana stones . Mr Geoffrey Leggett at IDC suggests , however , the valuer only ensures that the assortment of diamonds from Botswana conforms to an agreed sample and that the agreed contract price is paid . ` He is not a trader , he does not know what the stones are worth in the market . ' De Beers insists it remains on cordial terms with Botswana and says the country is still selling its diamonds through the CSO . It is not the first time that contract negotiations have gone on past the theoretical deadline . The Botswana government recently set up a diamond cutting centre with De Beers ' technical help , and this , too , should further the country 's understanding of the market . There has been a special relationship between the CSO and Botswana since 1987 when the country sold its diamond stockpile to De Beers in exchange for an estimated USDollars 250m and a 5.27 per cent shareholding in the South African group . Analysts suggest market conditions do not help Botswana press its case . De Beers , which itself mines about 40 per cent of the world 's annual rough diamond output , markets stones from Angola , Australia , Namibia , Tanzania , Zaire and the Soviet Union , as well as South Africa and Botswana . Prices of rough diamonds , with few exceptions , have moved upwards every year since the 1930s depression . But now De Beers is steering the world 's most successful cartel through depressed market conditions caused by the recession in the US -LRB- the biggest single market for diamonds -RRB- , sogginess in Japan -LRB- the second-largest -RRB- , and the Gulf war . To maintain price stability , the CSO is stockpiling diamonds at great expense , rather than releasing unwanted stones to the market . Its promotional budget has been lifted by 20 per cent to more than Dollars 1m a week - Dollars 53m for the year . In addition , Botswana this year faces its first budgetary deficit since 1982 and , according to De Beers ' calculations , one of its diamond mines - Orapa - needs investment of USDollars 600m . The CSO has also notched up some recent coups : bringing a big part of the Soviet Union 's and Angola 's rough diamond output back into the cartel - or what it calls its ` single channel marketing ' - arrangements . However , the CSO is also currently involved in contract negotiations with Argyle Diamonds , the western Australian company which is the biggest individual diamond producer in volume -LRB- but only sixth in value -RRB- terms . Argyle , too , wants to stay with the CSO when its contract ends on May 1 - but on more favourable terms . A delegation from Botswana is to meet CSO representatives in London at the end of this month for another attempt to break the deadlock . The industry is betting that Botswana will give way , perhaps in return for De Beers helping to finance the Orapa mine investment . However , the ` market window ' idea is unlikely to be dropped and will almost certainly be raised again when the next contract negotiations start .
extractive_keyphrases: individual diamond producer botswana politicians de beers south african group exclusive sales contract central selling organisation rough diamond sales diamond trade botswana diamonds rough diamond output contract negotiations