In a joint communique released Friday, the government of Botswana and the South African diamond giant De Beers announced that they have reached a new ten-year agreement over the sale of rough diamonds in the African country. The diamond industry in Botswana is entirely controlled by a joint venture between De Beers and the Botswana government, named Debswana.
The announcement revealed that the two parties agreed to extend the sales agreement for Debswana’s rough diamonds until 2033, and to extend the mining licenses for Debswana until 2054.
In a post on Twitter announcing the deal, the President of Botswana, Mokgweetsi Masisi wrote, “Done Deal! The transformational new agreements between the government of Botswana and De Beers reflect the aspirations of the people of Botswana.”
Although the two parties own equal shares in Debswana, under the previous agreement Debswana supplied 75% of its diamonds to De Beers, with only 25% being supplied to Botswana’s state-owned diamond broker, Okavango Diamond Company (ODC). Masisi’s administration has sought to renegotiate a new deal for five years, which would offer the state a larger share of the output. In doing so, the government has threatened to deny Debswana mining rights in the nation, after the current permits expired in 2029.
Masisi was successful, with the new agreement giving the government a larger share of the rough stones mined by Debswana. Now 30% of Debswana’s output beginning at the start of the contract will be destined for the government’s trader, and that will gradually increase to 50% over the course of the next decade.
The two parties also announced that a ‘Diamonds for Development Fund’ would be created, with De Beers contributing $75 million to the fund at the outset, and as much as $750 million over the next decade. The company noted the fund will supply “additional value to the Botswana economy” to “accelerate Botswana’s economic diversification” from diamonds.
In 2022, Botswana was the second largest diamond producer in Africa, and the third largest in the world after Russia and the Democratic Republic of Congo. Botswana’s economy is highly dependent on diamonds, with the precious stones supplying roughly 30% of its total revenue, and 70% of the nation’s foreign exchange earnings.
