Botswana has signed a crucial new diamond sales agreement with De Beers after years of negotiation. This 10-year deal enhances Botswana’s share of revenue from diamond sales, essential for its economy. Despite recent market challenges and a decline in sales, the agreement supports ongoing operations and seeks to stabilize revenue for the country going forward.
The government of Botswana has finalized a new diamond sales agreement with De Beers after extensive negotiations lasting seven years. This pact is fundamental to Botswana’s economy, as the country ranks as the top diamond producer globally by value and second in volume, trailing only Russia. The agreement boosts Botswana’s share of diamond sales through its joint venture, Debswana.
Under the terms of the deal, Botswana will receive 30% of Debswana’s diamond sales for the first five years, increasing to 40% for the following five years, with provisions for a five-year extension that allows for an equitable distribution of sales. This shift reflects the country’s heavy reliance on diamond revenue, which constitutes around 80% of its exports and 25% of its GDP, as stated by the International Monetary Fund.
Despite its diamond wealth, Botswana has faced financial hurdles due to a recent decline in diamond prices and demand, which impacted the national election, resulting in a shift in governance after 58 years of dominance by the previous political party. The new agreement was a key focus for Botswana’s current President, Duma Boko.
In return for the new sales structure, De Beers will have its mining licenses in Botswana extended by 25 years, allowing operations to continue until 2054. The deal reaffirms the longstanding relationship between the government and De Beers, critical for sustained economic growth.
Botswana’s record in finding large rough diamonds is notable, having unearthed a 2,492-carat stone last year, the second-largest ever found. Additionally, in 2021, Debswana reported discovering a 1,098-carat diamond. However, total sales from Debswana plunged to $1.53 billion during the first nine months of 2024, representing a decline of over 50% compared to the same period in 2023.
In summary, Botswana’s new diamond sales agreement with De Beers is vital for the nation’s economy, directly impacting export revenues and GDP. The structured increase in sales share over the next decade is designed to revert the country’s economic challenges despite the recent downturn in the diamond industry. The continued partnership with De Beers, alongside Botswana’s historical output of substantial diamonds, positions the country for future growth while navigating current market vulnerabilities.
Original Source: www.inkl.com
