- Botswana and De beers strike billion Pula agreement after years of tension
The long-awaited diamond sales agreement between Botswana and De Beers has finally been sealed, putting to bed years of tense negotiations. The historic deal was signed on Tuesday in Gaborone, marking a new chapter in the 50-year partnership between the two parties.
However, the 50/50 diamond share will only be applicable after the ten-year period, which includes a five-year extension period. Under the renewed agreement, Botswana’s Okavango Diamond Company (ODC) will sell 30% while De Beers will handle 70% of Debswana’s production for the first five years. In the following five years, ODC will sell 40% and De Beers will sell 60%. The two parties will only sell a 50/50 equal split during the five-year extension period.
Negotiations over the deal started in 2018, with both parties repeatedly extending the old agreement, which gave Botswana 25% of Debswana’s production and De Beers 75%. In 2023, the two sides provisionally agreed to terms under Botswana’s previous rule of former President Mokgweetsi Masisi, but they never formally signed an agreement.
President Duma Boko, who took office last October, made signing the deal with De Beers a priority. The deal is critical to Botswana’s fortunes, as the country’s economy is largely dependent on the export of diamonds. “We have secured 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,” Boko declared at the signing ceremony.
The 10-year deal aligns closely with the 2023 terms but may be extended by a further five years, along with a 25-year renewal of the mining licenses from 2029 through to 2054 for the Debswana mining joint venture. This will enable the Debswana joint venture to deliver long-term value from its existing mining assets and mine life extension projects, which include Jwaneng Cut 9, Jwaneng Underground Project, and Orapa Cut 3 beyond the current mining license period.
For her part, Minister of Minerals and Energy, Bogolo Kenewendo, hailed the agreement as a milestone. “We are proud to finally settle the signing of this landmark new agreement, which will underpin the success of our diamond industry as we enter an exciting new phase of Botswana’s sustainable economic development. We hope that these agreements will bring some level of stability and rebuild market confidence in the diamond industry. We are looking forward to our renewed partnership with De Beers; together, we will drive development through diamonds and build a brighter future for Batswana,” she said.
The agreement also introduces the Diamonds for Development Fund, with De Beers committing an upfront investment of P1 billion and annual contributions based on Debswana’s performance. Further, the two parties will collaborate on co-investment in marketing initiatives to boost diamond demand, as well as initiatives by De Beers to enhance local beneficiation of diamonds and increase participation of the people of Botswana in the diamond industry.
“The half-century partnership between Botswana and De Beers is considered the greatest public-private partnership in the world. Now, we are both extending and improving it. For De Beers, it is a privilege to secure our ongoing participation in the world’s greatest diamond resources for decades to come. I am also extremely proud that, through the Diamonds for Development Fund, we can further transform opportunities for the people of the world’s leading diamond country,” said De Beers Chief Executive Officer, Al Cook.
The deal comes at a critical time for Botswana, whose economy contracted last year because of a global diamond market slump, rising lab-grown diamond popularity, and shifting consumer preferences. However, the government hopes the economy will rebound this year because of an improvement in the global diamond market and better performance in other sectors, while De Beers hopes the new deal will create jobs at a time when the economy is in a slump.
