Botswana Strengthens Economic Ties with De Beers Through Strategic Diamond Deal

Botswana’s government has signed a new 10-year diamond sales agreement with De Beers, enhancing its share from 25% to 30% for the first five years and 40% for the next five. Despite being the world’s leading diamond producer, Botswana’s economy faces challenges due to declining diamond prices. The agreement was finalized under President Duma Boko, emphasizing the importance of the diamond industry to the nation’s economy.

Botswana has solidified a critical new diamond sales agreement with De Beers, concluding seven years of negotiations. This agreement, vital for the nation’s economy, allows the government to increase its share of diamond sales through the Debswana company, a joint venture with De Beers, a branch of Anglo American.

As the largest producer of diamonds by value and the second by volume, Botswana’s diamond trade is pivotal, constituting approximately 80% of its exports and a quarter of its GDP, as reported by the International Monetary Fund. Nevertheless, a drop in diamond prices and demand has severely affected the economy.

The newly established 10-year agreement increases the government’s share of Debswana’s sales from 25% to 30% for the first five years, culminating in a 40% share for the subsequent five years, with an option for a five-year extension leading to an equal 50-50 share. De Beers, in return, received an extended 25-year mining license in Botswana until 2054.

The agreement was finalized under the leadership of newly elected President Duma Boko, emphasizing the importance of this contract for national stability. President Boko remarked, “We are people of durable relationships. We have us a good deal and we trust that it will carry us into the future.”

Botswana has produced some of the largest rough diamonds globally, including a historic 2,492-carat diamond discovered last year. However, recent sales figures indicate a decline, with Debswana reporting sales of $1.53 billion in the first nine months of 2024, down over 50% from $3.19 billion in 2023. The World Bank has highlighted that such dependencies render the economy vulnerable.

In summation, Botswana’s new diamond sales agreement with De Beers represents a significant economic development following lengthy negotiations. By increasing the government’s share over time, this agreement aims to stabilize the economy amidst challenges in the diamond market. The partnership also offers a pathway for De Beers to continue its operations while addressing Botswana’s economic vulnerability.

Original Source: spectrumlocalnews.com