De Beers deal is boon for Botswana’s economy, President says

14th July 2023 By: Bloomberg

A new deal Botswana signed this month with De Beers that will give it access to more diamonds mined within the country will be a major boost for the economy, President Mokgweetsi Masisi said in an interview.

The arrangement between the gem giant, a unit of Anglo American, and the world’s second-largest producer is crucial to both sides and plays a central role in the global diamond supply chain.

“We’re very happy with the outcome. It could have been better but you know with a partnership you’ve always got to give as you take,” Masisi said in an interview with Bloomberg TV in Gaborone, Botswana’s capital. The deal will give Botswana “10 billion pula ($762 million) to diversify the economy and improve the diamond value chain” and help impart skills to young people and create jobs, he said.

Under the new accord, Botswana’s state-owned diamond trader will get 30% of output from Debswana, the De Beers unit that generally accounts for about two-thirds of the group’s annual production. The government said there’s also an agreement — still tentative at this stage — for that share to eventually increase to as high as 50%.

Botswana’s Okavango Diamond Company currently gets 25% of Debswana production. The agreement with De Beers also includes a new 25-year mining licenses for Debswana.

Masisi’s administration had been increasingly vocal in criticizing the 54-year-old agreement, and threatened to walk away if it didn’t provide more benefit to his country. Botswana’s partnership with De Beers remains enduring and solid, the president said.

Tensions between the authorities and De Beers also arose over the role of Belgian gem trader HB Antwerp, which has established a close relationship with the government. Earlier this year Botswana said it was taking a 24% stake in the company, without disclosing how much it paid, and would get some supply from ODC.

Botswana sees no conflict with De Beers over its ties with HB Antwerp and is open to taking a bigger stake in the Belgian gem trader, but that would depend on the attractiveness of any deal, Masisi said.