Botswana has signed a new 10-year diamond sales agreement with De Beers, increasing its share of sales from 25% to 30% initially, and potentially 50% in the future. The deal comes as the country faces economic challenges due to declining diamond prices, which account for a significant portion of its GDP and exports. The partnership aims to ensure sustained interest and revenue from diamond mining amidst recent sales declines.
Botswana has secured an improved 10-year diamond sales agreement with De Beers, enhancing its economic benefit from the lucrative diamond mining sector. The agreement, finalized after seven years of negotiations, increases the Botswana government’s share of diamond sales through Debswana, a joint venture with De Beers. This deal positions Botswana as a key player in the diamond industry, despite recent economic challenges.
Under the new agreement, the Botswana government will initially receive a 30% share of Debswana’s diamond sales, rising to 40% after five years. There is also a provision for a five-year extension which could lead to an equal 50-50 split. Simultaneously, De Beers has obtained a 25-year extension for its mining licenses in the country, ensuring long-term operational continuity.
The signing of this agreement took place under the leadership of President Duma Boko, who emphasized the importance of building enduring partnerships. Botswana’s economy significantly relies on diamond revenue, accounting for approximately 80% of its exports and 25% of its GDP, but fluctuations in diamond prices have caused economic strain.
Despite recent finds of large diamonds, including a record-breaking 2,492-carat stone, Debswana’s sales figures revealed a stark decline, dropping from $3.19 billion in 2023 to $1.53 billion in 2024 within the first nine months. The reliance on diamond earnings has made the national economy susceptible to downturns, highlighted during the recent elections when shifts in government reflected dissatisfaction with economic conditions.
In conclusion, the enhanced diamond sales agreement not only promises an increase in Botswana’s share of revenues but also offers a long-term strategy to stabilize and grow its economy despite challenges. The partnership with De Beers remains critical for Botswana’s future in the diamond mining market, particularly amidst declining sales.
The newly signed agreement between Botswana and De Beers is a strategic move to strengthen the nation’s economic ties with diamond sales. With a clear increase in revenue sharing and license expansions, the deal aims to mitigate the economic vulnerabilities caused by fluctuating diamond prices. Moving forward, the partnership is essential for both parties, especially as Botswana navigates post-election economic recovery. It remains crucial for Botswana to diversify its economy to reduce dependence on diamonds, ensuring sustainable growth in the future.
Original Source: www.newsday.com
