Botswana has signed a pivotal 10-year deal with De Beers, increasing its share of diamond sales from 25% to 30%, rising to 40% thereafter. This agreement is crucial for the nation’s economy, which heavily relies on diamond exports. Following significant declines in sales, the government aims to secure financial stability through this collaborative venture.
On Tuesday, Botswana’s government secured a significant diamond sales agreement with mining giant De Beers after seven years of negotiations. This deal enhances the government’s share in diamond sales through Debswana, its joint venture with De Beers, which is vital for the economy of this sparsely populated, arid southern African nation.
Botswana ranks as the largest producer of diamonds by value and second in volume, following Russia. Diamonds represent approximately 80% of Botswana’s exports and account for a quarter of its GDP, as reported by the International Monetary Fund. However, the economy has suffered due to falling prices and demand for mined diamonds, which also impacted the political landscape during the recent national elections.
The new 10-year sales agreement increases the government’s stake in Debswana’s sales from 25% to 30% for the first five years and 40% in the subsequent five years. There is also a potential five-year extension that could establish an even split of sales. In exchange, De Beers received a 25-year extension on its mining licenses from 2029 to 2054.
The terms had been broadly agreed upon in 2023, but formal signing was delayed until newly elected President Duma Boko prioritized the finalization of the deal. At the signing ceremony, Boko emphasized the importance of durable relationships, expressing optimism for the future.
Botswana has unearthed some of the world’s largest diamonds recently, including a record-holding 2,492-carat stone discovered by Canadian firm Lucara last year. Debswana also reported its largest find in 2021, a 1,098-carat diamond.
Despite these discoveries, Debswana’s sales fell significantly, totaling $1.53 billion in the first nine months of 2024, down over 50% from $3.19 billion the previous year. The World Bank highlights the risks of Botswana’s economic dependence on diamonds, signaling concerns about the future sustainability of this sector.
The newly signed agreement between Botswana and De Beers marks a crucial step for the country’s diamond industry, increasing government revenue and aiding economic stability. With a significant share in sales and potential for growth, the deal aims to counterbalance the challenges from declining diamond prices. However, the sharp decrease in sales revenue underscores the need for diversification in Botswana’s economy to mitigate risks associated with diamond dependence.
Original Source: spectrumlocalnews.com
