Botswana’s government and De Beers, the diamond mining unit of Anglo American, have finalised a 10-year diamond sales agreement after a protracted negotiation period, Reuters reported on Tuesday.
This new agreement replaces a provisional deal and includes a potential extension of five additional years.
The deal ensures the continued partnership between Botswana and De Beers in the diamond trade, securing a vital source of revenue for the country and maintaining De Beers’ access to a significant supply of diamonds.
Agreement revised
The final agreement between Botswana’s state-owned Okavango Diamond Company (ODC) and De Beers has been revised.
The initial provisional agreement stipulated that ODC’s share in the production of Debswana–the joint venture between ODC and De Beers–would reach 50%.
However, under the revised and finalised deal, ODC’s share in Debswana’s production will now reach 40% at the conclusion of the agreement.
Botswana’s government and De Beers released a joint statement indicating that ODC’s allocation could increase to 50% during the proposed five-year extension period.
Debswana will increase the percentage of its output sold through ODC from 25% to 30% over the next five years.
The original provisional agreement, established with the previous governing body in Botswana, outlined a framework for the gradual increase of ODC’s allocation over a ten-year period.
The culmination of this agreement would have resulted in ODC holding a 50% share by the end of the decade-long pact.
Negotiations began in 2018, and an agreement was announced in 2023. However, the deal was never formally signed.
Botswana’s President Duma Boko, who took office in October, prioritised signing the deal with De Beers.
Importance of the deal
The deal holds immense significance for the southern African nation as its economy is heavily reliant on the diamond trade.
The revenue generated from diamond exports plays a crucial role in supporting various sectors, including infrastructure development, education, healthcare, and social welfare programs.
Additionally, the diamond industry provides employment opportunities for a significant portion of the population, contributing to poverty reduction and economic stability.
Therefore, the successful completion of this deal is of paramount importance for the country’s overall economic well-being and future prosperity.
Boko said at a signing ceremony in the capital Gaborone:
We have us a good deal and we trust that it will carry us into the future. To the people of Botswana, this agreement is about you, about the jobs it will create.
The Botswana government has announced that Debswana’s mining licenses will be extended from 2029 to 2054.
This agreement comes amid a downturn in the global diamond market, which contributed to Botswana’s economic contraction last year.
The rough diamond market has been negatively impacted by a number of factors, including declining demand, oversupply, the increasing popularity of lab-grown diamonds, and shifting consumer preferences among younger generations.
However, the government expects economic recovery this year due to improvements in the diamond market and other sectors.
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