Botswana has signed a new diamond marketing agreement with De Beers, lasting 10 years with extensions, solidifying De Beers’ path to independence. The agreement follows an earlier deal and aims to stabilize the partnership amid downturns in the diamond market. De Beers previously cut production forecasts and faced a substantial write-down due to market conditions, though it maintained stock levels.
Anglo American announced that the Botswana government has officially signed a new diamond marketing agreement with De Beers, marking a significant step towards establishing its 85%-owned diamond unit as an independent entity. The agreement spans ten years with a five-year extension option and also extends mining licenses for Debswana from 2029 until 2054. Debswana operates the Jwaneng and Orapa diamond mines, which are joint ventures between De Beers and the Botswana government.
This new contract aligns with a previously signed in-principle agreement from September 2023 under former President Mokgweetsi Masisi but faced delays due to national elections, resulting in a leadership change. Current President Duma Boko’s party, the Umbrella for Democratic Change, defeated Masisi’s Botswana Democratic Party, affecting the timing of the agreement’s formalization.
Anglo CEO Duncan Wanblad indicated that this agreement brings stability to both parties amid challenging diamond market conditions. This accord is also a crucial element of Anglo’s strategic planning for potentially selling or listing its share in De Beers. Wanblad emphasized that it represents a pivotal moment for De Beers as it transitions toward operating independently in the diamond industry.
Previously, De Beers reduced its diamond production forecasts for 2025 by nearly 40% to an estimated 20 to 23 million carats, reflecting ongoing market challenges. In February, Anglo accounted for a $2.9 billion write-down of De Beers, contributing to a headline earnings loss of $3.1 billion for the year ending December. Following this, Wanblad stated the group’s interest in De Beers was valued at $4 billion after the impairment.
Currently, De Beers holds approximately $2 billion in diamond stocks, which include both rough and polished products, with Wanblad noting that there had been no increase in inventory levels over the past year. During the 2024 financial year, De Beers reached a break-even point despite the adverse conditions in the market.
The recent signing of a diamond marketing agreement between De Beers and the Botswana government is set to enhance stability and establish De Beers as an independent player in the diamond industry. Challenges in the diamond market, including production cuts and significant financial losses, have affected the company, but this agreement is crucial for its future direction. With a continued focus on maintaining manageable stock levels, De Beers aims to navigate the current economic landscape effectively.
Original Source: www.miningmx.com
