Botswana Secures Enhanced Diamond Sales Agreement with De Beers

Botswana has finalized a critical 10-year diamond sales agreement with De Beers, enhancing government revenue shares through Debswana from 25% to 30% for the first five years and to 40% thereafter. The deal includes a 25-year extension of mining licenses for De Beers. Despite past successes, the country faces economic challenges due to declining diamond prices.

Botswana has secured a pivotal 10-year diamond sales agreement with De Beers, crucial for its economy, following seven years of negotiations. This new deal enhances the government’s share of diamond sales through the Debswana joint venture from 25% to 30% initially and increases to 40% in the latter half of the agreement. Additionally, De Beers has received a 25-year extension for its mining licenses in Botswana, effective until 2054.

Diamonds constitute approximately 80% of Botswana’s exports and account for a quarter of its GDP. However, a downturn in diamond prices and demand has adversely affected the economy, contributing to political changes following last year’s national election. The new agreement was a priority for President Duma Boko, who emphasized the long-term relationship with De Beers during the signing ceremony.

Botswana is recognized as the leading producer of diamonds by value, having yielded numerous significant finds, including the largest rough diamonds in recent history. Despite these achievements, Debswana’s sales figures for the first nine months of 2024 fell to $1.53 billion, a substantial decrease from $3.19 billion in the same period of 2023. The World Bank has highlighted the risks associated with Botswana’s heavy reliance on diamond revenue.

The newly negotiated diamond sales agreement between Botswana and De Beers marks a significant advancement for the country, strengthening its economic position amid challenges in the diamond industry. With increasing shares for the government and the extended mining licenses for De Beers, this arrangement aims to secure Botswana’s diamond revenue for the future. Strategic management of this sector is essential given the volatility of diamond prices and the economic implications for the nation.

Original Source: www.thespec.com