Botswana signed a diamond deal with De Beers, increasing its share from 25% to 50% and securing 10 billion pula for development. The agreement extends mining licenses for Debswana until 2054. Despite being a top diamond producer, Botswana faces challenges in employment generation and economic diversification beyond mining.
On Tuesday, Botswana’s government finalized a long-awaited diamond mining and sales agreement with De Beers, a leading global diamond producer. This new arrangement boosts Botswana’s share of diamonds from the Debswana joint venture—from 25% to 50%. Additionally, the deal provides 10 billion pula (approximately $712 million) for development, following a preliminary agreement established in 2023.
The contract also extends Debswana’s mining licenses until 2054, revising the previous expiration date of 2029. Negotiations for this agreement had been ongoing since 2018 and had faced delays under former President Mokgweetsi Masisi but were prioritized by the current President Duma Boko, who assumed office in October 2023.
Botswana, recognized as the largest producer of rough diamonds by value globally, heavily relies on diamond mining for public revenue. Despite this dependency, President Boko expressed concerns about limited employment opportunities within the sector. While Debswana’s diamond output constitutes 80% of Botswana’s economy, the country has struggled with economic diversification beyond mining activities.
Although Botswana boasts a high annual per capita income of $7,820—higher than oil-rich Gabon and South Africa—job creation remains a pressing issue. This agreement is crucial for De Beers, as its parent company, Anglo American, contemplates divesting its diamond sector through a potential sale or IPO while grappling with weak global diamond prices.
Botswana plays a vital role in De Beers’ operations, contributing 70% of the company’s annual rough diamonds, and the government possesses a 15% stake in De Beers, highlighting their enduring partnership.
The recent signing of the agreement between Botswana and De Beers marks a significant shift in diamond revenue sharing, increasing Botswana’s stake to 50% and extending mining rights until 2054. Despite these positive developments, challenges remain in job creation and economic diversification beyond the diamond mining sector. This deal also underscores the strategic importance of Botswana in De Beers’ operational framework.
Original Source: www.mining.com
