Botswana Secures Vital 10-Year Deal with De Beers to Enhance…

Botswana’s government has finalized a new 10-year agreement with De Beers, enhancing its share of diamond sales from 25% to 30% initially, and to 40% in the following five years. This deal is crucial for the nation’s economy, which heavily depends on diamond exports. Despite recent challenges, the partnership aims to secure Botswana’s status as a top diamond producer while addressing market vulnerabilities.

On Tuesday, the government of Botswana concluded a foundational 10-year diamond sales agreement with De Beers, following extensive negotiations lasting seven years. This agreement, integral to Botswana’s economy, entails an escalating share of diamond sales through the Debswana joint venture, enhancing governmental revenue from diamond exports, a critical sector accounting for approximately 80% of the nation’s exports and one quarter of its GDP, as reported by the International Monetary Fund.

Botswana is the leading producer of diamonds by value and ranks second globally by volume, surpassed only by Russia. However, the nation has faced economic challenges due to a drop in diamond prices and demand, fueling discontent that led to significant political shifts in the recent national elections. The previous ruling party, having governed for 58 years since independence, was ousted amid concerns over the country’s economic stability.

The newly established agreement initially grants a 30% share of Debswana’s sales to the government, increasing to 40% in the latter five years. An option for a subsequent five-year extension will adjust the share to a balanced 50-50 split. Additionally, De Beers has received a 25-year extension on its mining licenses, extending from 2029 to 2054, in exchange for the adjusted sales agreement.

President Duma Boko prioritized finalizing the sales agreement shortly after assuming office following the recent elections. He emphasized the importance of durable relationships during the contract signing, stating, “We have us a good deal and we trust that it will carry us into the future.”

Botswana has been the source of remarkable rough diamonds, including a notable 2,492-carat diamond found last year, marking a century since the last record-setting diamond was discovered. However, despite exceptional finds, Debswana reported a significant decline in sales, dropping from $3.19 billion in the first nine months of 2023 to $1.53 billion during the same period in 2024, highlighting the ongoing vulnerabilities of an economy heavily dependent on diamond mining.

The signing of this revised diamond sales agreement between Botswana and De Beers marks a pivotal step toward bolstering the nation’s economic resilience amid challenges in the diamond market. With increased governmental revenue shares and an extension of mining licenses, the partnership aims to secure Botswana’s position as a leading diamond producer while addressing past economic fluctuations. These efforts demonstrate a commitment to stability and long-term growth in the diamond industry, essential for Botswana’s economic viability.

Original Source: www.newsday.com