Botswana Secures Enhanced Ten-Year Diamond Sales Agreement with De Beers
Botswana has signed a crucial ten-year diamond sales agreement with De Beers, enhancing its share of sales from 25% to 30% initially, and 40% thereafter. This partnership aims to strengthen the country’s economy amid recent challenges in the diamond market. As diamonds represent a significant portion of Botswana’s exports, diversification remains essential for long-term economic stability.
GABORONE, Botswana (AP) — The Botswana government has finalized a new ten-year diamond sales agreement with the De Beers mining company, marking the conclusion of seven years of negotiations. This pivotal deal enhances the government’s stake in diamond sales via its joint venture, Debswana, allowing them to acquire a larger share over time.
Under the revised terms, the government will increase its share from 25% to 30% for the first five years, subsequently rising to 40% for the following five years. An option for a five-year extension is included, potentially resulting in an equal 50-50 sales share thereafter. In exchange, De Beers will receive a 25-year extension for its mining licenses, extending from 2029 to 2054.
Botswana, known for its vast diamond resources, has experienced economic challenges due to a drop in diamond prices and demand, influencing the outcome of the previous national elections. The ruling party held power for 58 years until it was replaced due to public dissatisfaction stemming from this economic downturn.
“We have us a good deal and we trust that it will carry us into the future,” stated President Duma Boko during the contract signing ceremony. This agreement is crucial as diamonds constitute roughly 80% of Botswana’s exports and a quarter of its GDP, according to the International Monetary Fund.
Statistics reveal Debswana’s sales plummeted from $3.19 billion in the first nine months of 2023 to $1.53 billion during the same period in 2024, reflecting the vulnerabilities in Botswana’s economy heavily tied to diamond revenues. As the world’s leading diamond producer by value, Botswana’s dependency on this sector necessitates diversification to ensure long-term economic stability.
The discovery of the world’s largest rough diamonds in Botswana over the past decade, including a record-breaking 2,492-carat diamond found by Canadian company Lucara, underscores the potential still inherent within the industry, despite current challenges.
In conclusion, this new agreement between Botswana and De Beers represents a significant development for the country’s economy, particularly in light of the challenges posed by declining diamond prices. The increment in the government’s share of diamond sales is expected to bolster national revenues. However, Botswana’s heavy reliance on diamond exports raises concerns about economic resilience amid fluctuating market conditions.
Original Source: www.thespec.com
