Botswana has signed an improved 10-year diamond sales agreement with De Beers, increasing its share of sales. The deal grants a 30% share for the first five years, rising to 40% thereafter, with a long-term goal of a 50-50 split. This agreement aims to bolster Botswana’s economy amid challenges faced by the diamond industry due to declining prices and demand.
GABORONE, Botswana — The Botswana government has finalized a new diamond sales agreement with the De Beers mining company following seven years of negotiations. This agreement is vital for Botswana’s economy, particularly as the nation is the largest producer of diamonds by value and crucial to the country’s export revenue and GDP.
The new 10-year contract stipulates that the government will receive an increasing share of diamond sales via the Debswana company, a joint venture with De Beers. Initially, Botswana will earn 30% of Debswana’s sales over the first five years, increasing to 40% in the following five years, with an option to extend the agreement for five more years at a 50-50 split.
In exchange for this arrangement, De Beers has been granted a 25-year extension of its mining licenses in Botswana, which will now last from 2029 to 2054. The signing of this agreement is a significant focus for President Duma Boko, who took office after the recent elections that emphasized the economic challenges facing the country.
Botswana has produced some of the world’s largest rough diamonds in recent years, recently unearthing a 2,492-carat gem. However, despite its past successes, Debswana’s diamond sales dropped by more than 50% from the previous year, reflecting ongoing issues within the industry that have adversely affected the economy.
The reliance on diamond exports has rendered Botswana’s economy vulnerable, as highlighted by the World Bank. The recent changes in governance and economic pressures underscore the need for a robust strategy to navigate the future of the diamond sector in Botswana.
The new diamond sales agreement between Botswana and De Beers marks a significant improvement in the government’s share of diamond sales, ultimately supporting the nation’s economy amid challenges such as declining demand and prices. This deal, finalized under the new leadership of President Duma Boko, reflects a commitment to fortifying Botswana’s economic future and ensuring sustainable development within its diamond industry.
Original Source: www.newsday.com
