Botswana's President Mokgweetsi Masisi last week Sunday warned that his country may sever ties with diamond giant De Beers if talks to renegotiate a sales deal prove unfavorable to his government.
The story of these negotiations began with the 10-year, 2011 sales agreement which outlined terms for the marketing of diamonds produced by Debswana. However, this closure of this arrangement was extended by both parties due to the 2021 Corona Pandemic, to be fully hashed out again by June 30th of this year. Under the current deal, Debswana – a 54 year-old joint venture between De Beers and the Botswana government – sells 75% of its output to De Beers, while 25% goes to the state-owned Okavango Diamond Company. Botswana supplies 70% of De Beers’ rough diamonds.
Last year, Debswana’s diamond sales hit a record $4.588 billion, compared to $3.466 billion in 2021. Diamond sales, almost entirely from Debswana, account for two-thirds of Botswana’s foreign currency receipts and a fifth of its gross domestic product.
'If we don't achieve a win-win situation each party will have to pack its bags and go,' Masisi said at a rally of his ruling Botswana Democratic. Now 'we got insight into how the diamond market works and we discovered that we had been receiving less than what we should get,' said Masisi.
'We are upping the stakes because we want a larger share from our diamonds. It can't be business as usual,' he warned.
Mining company De Beers is confident that they will be able to maintain the long-standing partnership with Botswana, a company official stated publicly last Thursday, but said some of the negotiations to agree new terms were complex.
“It’s important to note that our negotiations span more than just the sales agreement, they also include the future mining rights for Debswana, which are more complex and require more time to land on the finer details,” De Beers’ Vice President-Corporate Affairs (Global Sightholder Sales) Otsile Mabeo said.
Photo Credit: Wikepedia