Botswana’s President Mokgweetsi Masisi has stated that the country will not back down on its demand to sell a larger share of the diamonds produced by its joint venture with De Beers.
This statement raises the stakes in talks to renew a sales deal that expires in June. Botswana and De Beers mine diamonds together under an equally-owned joint venture, Debswana.
Last year, Debswana’s production reached 24 million carats, of which three-quarters were sold to De Beers. The remainder was sold to state-owned Okavango Diamond Company (ODC), which was set up in 2011 as Botswana sought to market gems outside the De Beers system.
Botswana is responsible for supplying 70% of De Beers’ rough diamonds, which has given the country a significant bargaining chip in negotiations for a new sales deal.
Masisi has threatened to walk away from talks unless Botswana gets a larger share of the output from the joint venture, although he did not specify the size of the share it sought.
The experience of selling diamonds outside the De Beers system has shown Botswana that it can receive more revenue, and Masisi believes it is only logical for the country to want a larger share of the sales.
De Beers, which is owned by Anglo American Plc, says that Botswana’s government receives over 80% of returns from Debswana, including taxes and royalties.
However, Masisi believes that Botswana has denied itself the opportunity to sell its own diamonds through the joint venture agreement, which has been in place for 54 years.
He is seeking to negotiate a larger share of the sales to ensure that Botswana is not relegated to participating only in the rough diamond market.
De Beers has yet to comment on Masisi’s latest statement. However, last month, a De Beers spokesperson told Reuters that the company was confident that the Debswana partnership would continue, and that “the arrangement must make economic and strategic sense for both parties.”
De Beers sold rough diamonds worth $4.3 billion in 2022, a 13% increase over the previous year, while ODC’s sales were $1.2 billion, up from $963 million in 2021.
In conclusion, Botswana’s desire to sell a larger share of diamonds produced by its joint venture with De Beers is causing tensions between the two partners.
While De Beers claims that the current sales arrangement provides a significant return to Botswana’s government, Masisi believes that the country is missing out on the opportunity to sell its own diamonds through the joint venture agreement. It remains to be seen how negotiations will play out in the coming months.
