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De Beers, Botswana Reach New Sales Agreement
The agreement sees more rough diamonds going to Botswana and the development of a fund to help the country further diversify its economy.
This file photos shows the entrance to Jwaneng in Botswana, one of three active diamond mines in the country. De Beers Group announced over the weekend that it has reached a new agreement with the Botswana government regarding the sale and mining of diamonds in the country. (©De Beers Group/Photo credit: Ben Perry @ Armoury Films)
Gaborone, Botswana—De Beers Group and the government of Botswana have reached a new sales agreement after numerous extensions of the current contract and much speculation over the future of their 54-year partnership.
The two parties came to terms late Friday and De Beers announced details of the agreement Saturday.
The new sales agreement for the country’s rough diamond production extends through to 2033 while the mining licenses for Debswana, the mining company operated jointly by De Beers and the government, are good for 25 years, to 2054.
Under the terms of the new agreement, the share of Debswana supply sold through the government-owned Okavango Diamond Company (ODC), increases from 25 percent to 30 percent to start.
Over time, ODC’s share of supply will grow gradually, hitting 50 percent by the final year of the contract.
In an interview Monday morning, De Beers Executive Vice President Paul Rowley said the new agreement comes after years of negotiation—negotiations that were interrupted by the COVID-19 pandemic—and continues the precedent set when the current agreement was signed 13 years ago.
That agreement, which took effect Jan. 1, 2011, created ODC and dictated that diamond aggregation and sales would move from London to Gaborone, Botswana.
ODC’s share of the rough diamonds increased over time under that agreement too, from 10 percent to the 25 percent reached by the end of the contract.
Rowley said in hashing out this new contract, De Beers and the Botswana government were “very keen” to see the country move down the value chain and to create a “win-win situation” for both parties.
And, he noted, “that’s exactly where we landed.”
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The two parties came to terms late Friday and De Beers announced details of the agreement Saturday.
The new sales agreement for the country’s rough diamond production extends through to 2033 while the mining licenses for Debswana, the mining company operated jointly by De Beers and the government, are good for 25 years, to 2054.
Under the terms of the new agreement, the share of Debswana supply sold through the government-owned Okavango Diamond Company (ODC), increases from 25 percent to 30 percent to start.
Over time, ODC’s share of supply will grow gradually, hitting 50 percent by the final year of the contract.
In an interview Monday morning, De Beers Executive Vice President Paul Rowley said the new agreement comes after years of negotiation—negotiations that were interrupted by the COVID-19 pandemic—and continues the precedent set when the current agreement was signed 13 years ago.
That agreement, which took effect Jan. 1, 2011, created ODC and dictated that diamond aggregation and sales would move from London to Gaborone, Botswana.
ODC’s share of the rough diamonds increased over time under that agreement too, from 10 percent to the 25 percent reached by the end of the contract.
Rowley said in hashing out this new contract, De Beers and the Botswana government were “very keen” to see the country move down the value chain and to create a “win-win situation” for both parties.
And, he noted, “that’s exactly where we landed.”
The agreement also includes De Beers contributing to a newly created fund to help Botswana diversify its economy and create jobs outside the diamond industry, the country’s largest private employer.
Botswana has three active diamond mines, Jwaneng, Orapa and Letlhakane.
Their current life expectancy ranges from 13 years (Jwaneng, 2036) to 20 years (Letlhakane, 2043), though that could change if any extension projects are approved. (A fourth mine in the country, Damtshaa, is on extended care and maintenance.)
Under the new agreement, De Beers will invest $75 million upfront and contribute as much as $750 million over the next 10 years to the “Diamonds for Development Fund,” a fund designed to help Botswana grow its economy and create more jobs in the diamond industry as well as in other sectors, with a focus on supporting the growth of a “knowledge-based economy.”
“That’s not new, to be fair,” Rowley said Monday.
He said De Beers has been looking at ways to help Botswana diversify its economy for many years, including through supporting entrepreneurship—particularly women-owned businesses—investing money in tourism and protecting the Okavango Delta, and supporting the development of “green” energy.
The deal reached last week is an agreement in principle. The terms of the current sales and mining agreements, which technically expired Friday, will remain in place as the two parties work out the implementation of the new contract.
Rowley said they expect to have it finalized in late 2023 or early 2024.
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