Botswana’s President Mokgweetsi Masisi has reiterated that the country will not back down on its demands for a greater share of rough diamonds from its joint venture with De Beers. The stakes have been raised as talks for a new sales deal between the two entities appear to be stalling. The current diamond sales agreement, which has been extended three times since 2020, is set to expire next month.
The mining of precious stones in Botswana is carried out through a 54-year-old joint venture called Debswana Diamond Co., in which Botswana and De Beers have equal ownership. Under the existing agreement, De Beers receives 75% of Debswana’s production, amounting to 24 million carats in 2022.
The remaining balance is sold to the state-owned Okavango Diamond Company, which was established in 2011 as Botswana sought to independently sell some gems outside of the De Beers system.
President Masisi, who has been in office since 2018 and is set to seek re-election in the upcoming elections, now seeks to expand Botswana’s diamond sales beyond the De Beers channel. He expressed dissatisfaction with the current agreement, stating that it is overly restrictive for Botswana. Masisi made these remarks during a community meeting in Mmadinare, a town located 400 kilometres (248.55 miles) northeast of the capital, Gaborone.
“Our agreement with De Beers is very restrictive to us. We signed it at a time when we didn’t have much knowledge, but now our eyes are open,” said Masisi in Setswana.
The President hinted at the possibility of a stalemate and potential litigation over the sales agreement. Despite the risks, he emphasised that Botswana will not back down on its demand for a larger share of Debswana’s output. Masisi stated that even if the litigation is lost, the diamonds will remain the property of Botswana, and the country will never yield. He acknowledged the political implications of the issue, noting that he is prepared to lose votes over it.
This is not the first time Masisi has threatened to walk away from the negotiations if Botswana’s demands are not met. Although the government has not publicly specified the exact share it seeks, it is rumoured to be as high as 50%, which would double the current allocation.
De Beers, a subsidiary of Anglo American Plc, has not yet commented on the matter.
According to the diamond giant, Botswana currently receives over 80% of the returns from Debswana, accounting for taxes and royalties. De Beers has previously expressed confidence in the continuation of its five-decade partnership with Botswana, aiming to reach terms that are economically and strategically favourable to both parties.
The outcome of the negotiations between Botswana and De Beers will have significant implications for both entities. Botswana is one of the world’s leading diamond producers, and its partnership with De Beers has played a crucial role in its economic development. However, the country now seeks to capitalise further on its diamond resources and gain greater control over the marketing and sale of its gems.
As the talks continue, industry observers are closely monitoring the situation, recognizing that a potential shift in the dynamics of Botswana’s diamond industry could have far-reaching consequences. Both parties will need to find a mutually beneficial solution that addresses the aspirations of Botswana while maintaining the long-standing partnership that has been crucial to the success of the diamond sector in the country.
