Botswana has entered a new diamond sales agreement with De Beers after seven years of negotiations, increasing its share of sales from 25% to 30% initially, rising to 40% later. This was emphasized as a key step for its economy, which relies heavily on diamonds. The deal offers a 25-year mining license extension to De Beers. Recent sales figures indicate a significant drop, highlighting economic vulnerabilities.
Botswana has formalized a significant diamond sales agreement with De Beers, marking a crucial development for its economy following seven years of negotiations. Under this new ten-year agreement, Botswana’s government will gradually increase its share of diamond sales through its joint venture, Debswana, with De Beers, a subsidiary of Anglo American.
As the largest diamond producer by value and second by volume, Botswana’s economy heavily relies on diamond revenues, which constitute approximately 80% of its exports and a quarter of its GDP, according to the International Monetary Fund. However, a decline in diamond prices and demand has severely affected the economy, becoming a central issue in the recent national election where the long-dominant party was ousted.
The revised sales agreement stipulates that Botswana’s government will receive an initial 30% share of Debswana’s sales for the first five years, increasing to 40% in the following five years. There is also an option for a five-year extension that could result in an equal 50-50 profit share. In addition, De Beers has obtained a 25-year extension of its mining licenses in Botswana, valid from 2029 until 2054.
The terms of this agreement, initially agreed upon in 2023, were finalized under the new president, Duma Boko, who emphasized the importance of sustainable relationships during the signing ceremony. He expressed confidence in the deal’s potential to benefit Botswana’s future.
Botswana has also successfully discovered some of the world’s largest rough diamonds, including a remarkable 2,492-carat gem last year, as well as a 1,098-carat diamond found by Debswana in 2021. Nevertheless, Debswana’s total sales have seen a decline, falling to $1.53 billion in the first nine months of 2024, down over 50% from $3.19 billion in the same period of 2023, highlighting the current vulnerability of Botswana’s economy to fluctuations in the diamond market.
The newly established diamond sales agreement between Botswana and De Beers reflects a significant step towards enhancing Botswana’s economic stability. The government’s increasing share of diamond revenues is crucial, particularly in light of recent economic difficulties linked to declining diamond prices. As the country continues to navigate its dependency on diamonds, this agreement may offer a pathway towards greater economic resilience and sustainability in the future.
Original Source: spectrumlocalnews.com
