Botswana’s Longtime Diamond Deal With De Beers Under Threat

Mukondisi Dube

Gaborone, Botswana – His president of Botswana, Mokgweetsi Masisi, has threatened to pull out of a diamond mining contract with industry giant De Beers unless the company offers better terms. Under the current agreement, which expires in June, Botswana, Africa’s largest diamond producer, will have the right to purchase up to 25% of the stones mined in the joint venture. Analysts say Botswana is in a strong position to push for a 50/50 deal.

Speaking to his ruling party supporters in his native village of Moshpa just outside Gaborone, President Mokgweetsi Masisi said the country was well positioned to push for a better deal with De Beers.

“We now know how the diamond industry works. We used to own a 10% stake and now, under my leadership, we have a 25% stake,” he said.

Botswana currently earns approximately $4.5 billion annually in sales, taxes and royalties from its dealings with De Beers.

Masisi said Botswana was ready to pull out of the long-standing deal if talks with South African diamond companies fell through.

“We’re fighting a giant. I’ve never seen him so upset. we want ours This is our company. We would like to acquire a majority stake and we are doing so through negotiations. “If negotiations get tough, we’ll say no, let’s all pack up and go our separate ways.”

It’s unclear what other options Botswana has, but Belgium-based diamond mining researcher Hans Merkett says there may be other options.

Merket notes President Masisi’s praise for another supply deal between private his diamond prospector Lucara, which operates a mine in Botswana, and Belgium-based buyer HB Antwerp. The two signed a deal under which HB Antwerp would purchase all of Lucara’s large, high-quality diamonds.

“Botswana’s President Masisi has regularly praised the business agreement between HB Antwerp and Lucara. Botswana’s raw produce is produced further down the supply chain after being cut and polished,” he said.

Merket therefore suggests that Botswana, like Lucara and HB Antwerpen, may be looking for far more favorable deals.

“The business model between HB Antwerp and Lucara bridges this gap through a vertically integrated supply chain that allows all parties, including the government, to share the profits from the finished abrasive product,” he said. . The leader of Botswana’s largest opposition party, Dithapelo Keorapetse, recently told parliament that the government needs to be more transparent about mining deals.

“Mining contracts are considered confidential, especially for companies affiliated with the Debswana and Botswana governments, so much so that the Comptroller General cannot even access them. So who will protect the Guardians? Will these contracts be reviewed? What role will Congress play? Keolapetze asked. A 10-year distribution agreement between Botswana and De Beers expired in 2021 but has been extended to June 2023 pending negotiations.