De Beers reach an agreement

Botswana and De Beers Group have agreed to a new diamond sales deal in which the world’s No. 1 diamond producer by value, gradually increases the share of rough stones it gets from their joint venture Debswana over the next decade to 50%, the government and the mining company said on Saturday.

The Botswana government and De Beers said they had agreed on a 10-year sales deal for Debswana’s rough diamond production through to 2033, and on a 25-year Debswana mining licence valid until 2054.

Debswana is jointly owned by the Anglo-American unit and the government and has been selling 75% of its output to De Beers, with Botswana’s state-owned Okavango Diamond Co (ODC) taking up the remainder of the stones.

ODC will receive 30% of produce from Debswana from the start of the new contract and this will be scaled up to 50% in the last year of the pact, De Beers and the government said in a joint statement.

“From the start of the new contract period ODC will receive 30 per cent of Debswana production, progressively increasing to 50 per cent by the final year of the contract, ensuring a sustainable transition path for both partners,” De Beers said in the statement.

The miner will also pump in 1 billion pula ($75 million) towards a diamond fund which would invest in “additional value to the Botswana economy,” the company said, adding the contributions would grow 10 times over the next 10 years.

Botswana President Mokgweetsi Masisi, who has been pushing for a bigger share of Debswana’s output, had threatened to sever ties with the mining company if the government’s concerns weren’t reflected in the new deal that has been in negotiation since 2018.

The Botswana-De Beers agreement allows the partners to advance the investment required to secure Debswana’s position as one of the world’s leading gem producers, De Beers said.

Botswana, where De Beers has been present for 50 years, is heavily reliant on diamonds, with two-thirds of its foreign currency receipts coming from mining, sales and ancillary activities linked to the precious stone.