Botswana Secures New 10-Year Diamond Deal with De Beers, Enhancing Economic Stability
The Botswana government signed a 10-year diamond sales agreement with De Beers, increasing government revenue from diamond sales through Debswana. The agreement reflects a 30% share for the first five years, increasing to 40% thereafter. Despite struggles in the diamond market, the deal is seen as vital for bolstering Botswana’s economy.
On Tuesday, the government of Botswana established a new 10-year sales agreement with De Beers, following extensive negotiations lasting seven years. This agreement enhances government revenue through its joint venture, Debswana, which is the main contributor to Botswana’s diamond exports. Diamonds are vital to Botswana’s economy, constituting approximately 80% of exports and a quarter of the country’s GDP according to the International Monetary Fund.
Botswana’s diamond industry has faced challenges, including declining prices and demand, which have severely impacted the economy. This downturn significantly influenced the national elections held last year, where the long-standing ruling party was ousted due to the adverse economic conditions. The new agreement aims to provide a more favorable revenue structure that reflects current economic needs.
The updated contract stipulates that the government will receive a 30% share of Debswana’s sales for the first five years, increasing to 40% for the next five years, with an option for a five-year extension that could result in a 50-50 split. De Beers has consequently secured a 25-year extension of its mining licenses in Botswana, valid until 2054.
President Duma Boko emphasized the importance of the agreement at the signing ceremony, stating, “We are people of durable relationships. We have us a good deal and we trust that it will carry us into the future.” Botswana has also been notable for discovering some of the largest rough diamonds globally, including a record 2,492-carat stone unearthed last year.
Despite recent successes in finding large diamonds, Debswana’s sales have seen a significant drop, with figures for the first nine months of 2024 falling to $1.53 billion, more than a 50% decline from $3.19 billion in the same period the previous year. The World Bank has noted that Botswana’s heavy reliance on diamonds has created economic vulnerabilities.
The recent agreement between Botswana and De Beers represents a critical development in the nation’s diamond industry, promising increased government revenue amidst ongoing economic challenges. The strategy to increase the government’s share from diamond sales aims to bolster the economy while the mining company receives extended operational licenses. The situation underscores the importance of diamond revenues to Botswana’s national fiscal health, particularly following recent economic downturns.
Original Source: spectrumlocalnews.com
