De Beers, the world’s largest diamond producer by value, has extended its 10-year sales agreement with Botswana, where it sells diamonds from the world’s richest mines, for another year to give the parties enough time to reach a new deal.
The decade-long contract was due to expire by the end of this month, but both De Beers and the government of Botswana said logistical challenges caused by covid-19 meant they needed more time to negotiate a fresh sales agreement.
The parties took years to discuss the current deal, which triggered De Beers’ decision to relocate all its diamond selling and sorting staff to the southern African country from London.
Debswana Mining Company, held by the Anglo American unit and the Botswana government, needs a new agreement to guarantee an influx of cash into the country. The joint venture provides the nation with around two-thirds of its foreign exchange and makes up a fifth of its GDP.
For De Beers, a new agreement would mean another 10 years of clarity on the terms of its revenue stream from a country from where it sources 70% of its diamonds and 90% of its sales.
The wealth from diamond mining has helped transform Botswana from primarily an agriculture-based economy to one of Africa’s richest countries.
De Beers has been mining diamonds in Botswana for half a century. The miner sells its diamonds to a handpicked group of about 80 buyers, 10 times a year, at so-called “sights.” The events are held in the country’s capital, Gaborone.
De Beers has continued to implement a more flexible approach to sales during the year, as a result of restrictions triggered by the pandemic.
It has also cut prices of its stones, sometimes by almost 10% for larger diamonds, in an effort to boost sales.