Botswana has signed a significant 10-year diamond sales agreement with De Beers, increasing the government’s share from 25% to 30% initially and up to 40% later on. Diamonds are crucial to Botswana’s economy, but a downturn in demand has impacted sales significantly. The agreement marks a strategic partnership following President Duma Boko’s election and aims for economic sustainability amidst challenges.
Botswana’s government has finalized a pivotal diamond sales agreement with the De Beers mining company after extensive negotiations spanning seven years. This agreement, essential for the country’s economy, modifies the government’s share in diamond sales through its joint venture, Debswana, with De Beers, a subsidiary of Anglo American.
As the leading producer of diamonds by value and the second largest by volume, Botswana’s diamond trade constitutes approximately 80% of its exports and a quarter of its GDP, according to the International Monetary Fund. However, the economy has been severely impacted by declining diamond prices and demand, leading to significant economic hardship, which was a prominent issue in the previous national election.
Under the terms of the new 10-year agreement, the government will increase its share of Debswana’s sales from 25% to 30% in the first five years, escalating to 40% in the subsequent five years. Furthermore, there is a provision for a potential five-year extension that could bring the share to 50-50. In exchange, De Beers has secured a 25-year extension for its mining licenses in Botswana.
The agreement’s finalization was prioritized by Botswana’s new President, Duma Boko, who assumed office following the October elections and emphasized the importance of durable partnerships during the signing ceremony.
In recent years, Botswana has discovered some of the world’s largest rough diamonds, including a remarkable 2,492-carat stone found by Canadian firm Lucara in 2022. Yet, Debswana reported a significant drop in total sales, amounting to $1.53 billion in the first nine months of 2024, down over 50% from $3.19 billion during the same timeframe in 2023. The World Bank has highlighted that Botswana’s heavy reliance on diamonds renders its economy vulnerable.
The recent diamond sales agreement between Botswana and De Beers signifies a critical step for Botswana’s economy, bolstering the government’s share in diamond sales while extending De Beers’ mining licenses. This move addresses the challenges posed by declining diamond prices and highlights the importance of maintaining strong business relationships for sustainable economic growth. Despite past hardships, Botswana remains a key player in the diamond industry, with potential for recovery and growth.
Original Source: spectrumlocalnews.com
