Botswana has secured a new ten-year diamond sales agreement with De Beers, increasing its sales share to 30% initially, rising to 40% after five years, with potential for a 50-50 split. The agreement is crucial for the economy, which heavily relies on diamond exports, as recent sales have decreased significantly. President Duma Boko emphasizes trust in the partnership, aiming for a stable economic future.
GABORONE, Botswana (AP) — The government of Botswana has finalized a significant diamond sales agreement with De Beers after seven years of negotiations. This deal is pivotal for the nation’s economy and increases the government’s share of diamond sales through its joint venture, Debswana, from 25% for the initial five years to 30%, followed by a 40% share for the subsequent five years. An option for a five-year extension could elevate the share to a 50-50 split.
Botswana is the leading producer of diamonds by value worldwide, with these precious stones constituting approximately 80% of its exports and a quarter of its GDP, according to the International Monetary Fund. However, a downturn in diamond prices and demand has adversely affected the economy, contributing to significant political changes following the last election, where long-standing ruling parties faced dismissal due to economic challenges.
As part of the agreement, De Beers has been granted a 25-year extension of its mining licenses in Botswana, running from 2029 to 2054. The two parties reached a broad consensus on the deal terms earlier in 2023, with the signing prioritized by the newly elected President Duma Boko, who emphasized the importance of strong partnerships in safeguarding the nation’s future.
Botswana has been the source of the world’s largest rough diamonds over the past decade, including a remarkable 2,492-carat diamond discovered last year, marking it as the largest find in over a century. However, Debswana’s sales for the first nine months of 2024 were reported at $1.53 billion, demonstrating a significant decline of over 50% from $3.19 billion during the same timeframe in 2023. This situation underlines Botswana’s economic vulnerability due to its reliance on diamond exports.
The recent ten-year agreement between Botswana and De Beers enhances the government’s stake in diamond sales, indicating a strategic move to secure critical economic benefits. With diamonds accounting for a significant portion of the nation’s GDP, the deal aims to bolster Botswana’s economy amid current challenges. Moving forward, both parties appear committed to nurturing their partnership and navigating the turbulent landscape of diamond sales.
Original Source: www.thespec.com
