GABORONE, Botswana — The government of Botswana has successfully finalized a pivotal diamond sales agreement with the De Beers mining conglomerate after prolonged negotiations spanning seven years. This contract is integral to the economic landscape of Botswana, underpinning the financial advancements of the nation.
The newly established deal enhances the government’s proportion of diamond revenue through Debswana, a joint venture with De Beers, which is itself a branch of Anglo American. Botswana, recognized for its sparsely populated lands and its largely arid climate, stands as the largest diamond producer by value across the globe and ranks second in volume, only eclipsed by Russia. As per the International Monetary Fund data, diamonds comprise about 80% of Botswana’s exports, accounting for a quarter of its GDP.
However, a downturn in both price and demand in the global diamond market has adversely affected Botswana’s economy. These fiscal challenges were a significant concern during the nation’s recent elections, which saw the surprising ousting of a party that had governed since the country’s independence from British rule. This election upheaval was largely credited to the economic strains induced by the diamond industry’s decline.
The agreement spans a decade, offering Botswana a 30% stake in Debswana’s sales initially, increasing from the previous 25% share for the initial five years. For the subsequent five-year period, this share will rise to 40%. Furthermore, the agreement includes a possible extension for an additional five years, during which the sales share will be equal between the parties.
In exchange, De Beers receives an extension of its mining licenses in Botswana, valid from 2029 until 2054. Despite setting broad terms in 2023, the signing had been pending, and the new Botswana President, Duma Boko, prioritized finalizing this deal upon assuming office after the October elections. “We are people of durable relationships,” President Boko remarked during the signing ceremony. “We have secured a beneficial agreement that will bolster our future.”
Botswana has been at the forefront of significant diamond discoveries over the past ten years, including a remarkable 2,492-carat diamond unearthed last year, the second-largest on record. This discovery marked the largest find in more than a century, attributed to the efforts of Canadian mining company Lucara. On the other hand, Debswana discovered a notable 1,098-carat diamond in 2021, the largest in its history.
Nonetheless, the economic returns from Debswana have seen a significant decline. Sales revenue for the company in the first nine months of 2024 was reported at $1.53 billion, a substantial decrease from $3.19 billion in the same timeframe in 2023. The World Bank has noted the economic vulnerability of Botswana, stemming from its heavy reliance on diamond production.
