Botswana’s government signed a new 10-year diamond sales agreement with De Beers after seven years of negotiations. The deal increases Botswana’s share of sales through Debswana to 30% initially, rising to 40% later, with a potential extension to 50%. This agreement is vital for an economy heavily reliant on diamonds, which have seen declining prices and demand, raising economic concerns.
On Tuesday, in Gaborone, Botswana, the government finalized a pivotal diamond sales agreement with De Beers after protracted negotiations lasting seven years. This agreement is vital for Botswana’s economy, which relies heavily on its diamond industry through the Debswana joint venture, a partnership with De Beers, a subsidiary of Anglo American.
Botswana is renowned as the largest diamond producer by value and ranks second in volume, following Russia. Diamonds constitute approximately 80% of the nation’s exports and account for about 25% of its GDP, as indicated by data from the International Monetary Fund. However, a significant downturn in diamond prices and demand has adversely affected Botswana’s economy, becoming a focal point in the national election held last year.
The newly established ten-year agreement stipulates a gradual increase in the government’s share of Debswana’s sales, starting with 30% in the first five years—up from the previous 25%—and rising to 40% in the subsequent five years. An option for a five-year extension, resulting in a 50-50 revenue share, has also been included. Additionally, De Beers received a 25-year extension on its mining licenses in Botswana, extending from 2029 to 2054.
Initial term agreements for the deal were reached in 2023, but the official signing took place recently under the leadership of President Duma Boko, who took office following the October elections. At the signing ceremony, President Boko remarked, “We are people of durable relationships. We have us a good deal and we trust that it will carry us into the future.”
Over the past decade, Botswana has produced some of the world’s largest rough diamonds, including a record-setting 2,492-carat stone discovered last year, and Debswana unearthed a 1,098-carat diamond in 2021, its largest to date. Nonetheless, Debswana’s sales have plummeted, with reported earnings of $1.53 billion in the first nine months of 2024, a significant decrease from $3.19 billion in the same period the previous year. The World Bank has pointed out that Botswana’s economic reliance on diamond sales poses vulnerabilities for the nation.
In summary, Botswana’s new diamond sales agreement with De Beers marks a significant development for the country’s economy, enhancing its share in diamond sales amidst ongoing market challenges. This deal not only extends De Beers’ operational licenses but also aims to stabilize Botswana’s economic dependencies on diamonds. The upcoming years will be crucial as Botswana navigates the effects of fluctuating diamond prices and seeks to secure its economic future through this partnership.
Original Source: spectrumlocalnews.com
