New De Beers diamond deal to give Botswana greater share in sales

Gaborone – Botswana signed a deal Tuesday with leading diamond producer De Beers that increases its share of sales to 30 percent and projects a possible 50 percent stake within a decade.

The economy of the southern African country, the world’s second largest diamond producer after Russia, is dependent on sales of the stones which account for about 30 percent of its GDP and 80 percent of its exports.

The new agreement will increase the government share of sales of diamonds mined by its 50:50 venture with De Beers, called Debswana, to 30 percent over the next five years, De Beers said in a statement.

This is up from 25 percent over the past five years and only 10 percent before then.

For the following five years, Botswana’s share will rise to 40 percent with 60 percent held by De Beers. Both parties will have a 50 percent share should there be a five-year extension.

The long-awaited agreement, which took around five years to finalise, also extended Debswana’s mining licences for 25 years from 2029, the statement said.

Botswana’s economy has taken a knock from a fall in the sale of its diamonds, in part because of competition from synthetic varieties. There is also weaker demand from China, the world’s biggest spender in the luxury sector.

“We hope that these agreements will bring some level of stability and rebuild market confidence in the diamond industry,” Botswana minerals minister Bogolo Kenewendo said in the statement.

“These are groundbreaking agreements,” said De Beers Group CEO Al Cook. “The half-century partnership between the Government of Botswana and De Beers is considered the greatest public-private partnership in the world.”

De Beers, the world’s leading diamond company, also pledged to invest $75 million in a fund for economic growth and jobs in Botswana.

De Beers has four mines in Botswana, including the world’s richest diamond mine by value called Jwaneng, which is about 170 kilometres (110 miles) west of the capital Gaborone.