Botswana May Increase De Beers Stake as Anglo American Considers Spin-Off

The Botswana government is considering increasing its shareholding in global diamond miner De Beers, according to President Mokgweetsi Masisi, following parent company Anglo American’s announcement of plans to spin off or sell the business.

Botswana currently owns a 15% stake in De Beers and contributes 70% of the company’s annual rough diamond supply. Masisi shared this information in an interview with JCK News, highlighting the potential for the government to raise its shareholding if the terms are favourable.

Anglo American has initiated a comprehensive review of its operations, which includes the potential sale or divestment of its diamond business. This strategic shift aims to refocus Anglo’s core interests on copper, iron ore, and a fertilizer project in the UK, particularly in response to a possible takeover by the larger BHP Group. Masisi remarked that Anglo’s sale of De Beers would be “the best thing” if it happens.

Masisi stated in Las Vegas that Botswana could increase its stake in De Beers provided the opportunity is appealing. “We could raise our shareholding in De Beers if it’s attractive to us,” Masisi told the online diamond news channel. In a previous statement to CNBC Africa, Masisi affirmed the government’s commitment to safeguarding its interests in the diamond industry, saying, “We will defend our interests in the diamond miner”.

One of Anglo’s potential strategies includes an initial public offering (IPO) for the diamond business, as reported by Reuters on 14 May 2024, citing sources. Amidst a global slump in luxury goods demand, diamond prices have faced significant declines. De Beers has responded by limiting supply and offering more flexibility to its contracted customers. In February, Anglo American announced a $1.6 billion impairment charge on De Beers. Anglo acquired a 40% stake in De Beers from the Oppenheimer family for $5.1 billion in 2011.

Masisi expressed that Botswana’s ideal partner in De Beers would be a long-term investor with a vision aligned with the government’s. “One of the characteristics of a bad owner is someone who has impatient capital. This industry requires somebody who is in it for the long-haul, because it has its ups and downs,” said Masisi. He added that the government aims to “keep the bad guys out” and is looking for investors whose long-term vision matches that of Botswana’s.