Botswana has finalized a new 10-year agreement with De Beers, increasing government shares of diamond sales from 25% to 30% initially and potentially to 50%. The deal is crucial for an economy heavily reliant on diamonds over the last decade, which faces significant price declines impacting revenues. President Duma Boko highlighted the importance of this agreement for the nation’s future stability.
The government of Botswana has successfully negotiated a new diamond sales agreement with De Beers following seven years of discussions. This agreement is vital for the national economy and has increased the government’s share of diamond sales through Debswana, its joint venture with De Beers, from 25% to 30% for the first five years and up to 40% for the subsequent five years, with a potential extension allowing for a 50-50 distribution thereafter.
Botswana is recognized as the world’s largest diamond producer by value and holds the second position by volume, trailing only Russia. Approximately 80% of the country’s exports and a quarter of its GDP are derived from diamond processing. However, recent declines in diamond prices have adversely affected the economy, influencing political shifts evidenced in last year’s elections, which saw the ouster of a longstanding ruling party due to economic frustrations.
The formalization of this agreement was a significant priority for President Duma Boko, who assumed office following the October elections. “We have a good deal and we trust that it will carry us into the future,” he stated during the signing ceremony.
Debswana has discovered some of the largest diamonds in recent history, including the remarkable 2,492-carat diamond found last year, which ranks as the second-largest ever unearthed. Despite these discoveries, Debswana’s sales faced a substantial drop in 2024, plunging by over 50%, highlighting the precarious nature of Botswana’s reliance on diamond exports.
This new ten-year agreement also grants De Beers a 25-year extension of their mining licenses in Botswana, ensuring continued collaboration between the company and the government. As the country navigates its economic vulnerabilities, the diamond industry remains a cornerstone of Botswana’s financial landscape, albeit a challenging one.
In conclusion, Botswana has secured a pivotal ten-year diamond sales agreement with De Beers, increasing its share of diamond revenues significantly. This deal, vital for Botswana’s economy, comes at a time when the diamond market is experiencing downturns. President Duma Boko emphasized the importance of this relationship for the country’s future, as Botswana continues to be a major player in the diamond industry despite current economic challenges.
Original Source: www.newsday.com
