Botswana and De Beers ink a last-minute, 10-year new deal on diamond sales
Botswana and diamond miner De Beers announced on Saturday they had reached an ‘agreement in principle’ on a new 10-year sales agreement. This came hours after the previous sales agreement expired on Friday, 30 June, so there must have been some serious nail-biting in the boardroom.
A diamond may be forever, but an agreement to sell or mine the precious gemstones is not.
De Beers and the government of Botswana, after lengthy and at times apparently tense negotiations, finally clinched a 10-year new sales deal to 2033 as the old one expired. De Beers produces rough diamonds in Botswana, the world’s second-leading source of the gemstones after Russia, through Debswana, a 50-50 joint venture with the government. Anglo American has an 85% stake in De Beers.
In the terse statement that was issued on Saturday, no details of the agreement were unveiled.
“The transformational new agreement between Botswana and De Beers reflects the aspirations of the people of Botswana, propels both Botswana and De Beers forward, and underpins the future of their Debswana joint venture through long-term investment,” it said.
“While the partners finalise the implementation of the formal Sales and Mining Agreements, an Interim Agreement will preserve the terms of the most recent Sales Agreement, which expired on 30 June.”
This signals that some i’s are still being dotted and some t’s are still being crossed, which means that some lawyers are coining it. Agreement in principle was also reached on new 25-year Debswana mining licences through to 2054.
“We’re delighted to have reached agreement in principle with our partners in Botswana for the Debswana Sales Agreement and Mining Licences. However, while we seek to finalise the details of the implementation of the agreements, we continue to be bound by confidentiality commitments,” De Beers’ media desk said in an emailed response to Daily Maverick’s queries at the weekend.
Under the 2011 sales agreement — which had been extended beyond its 2020 expiry date a number of times, not least because of the pandemic — 75% of the output was sold to De Beers. It remains to be seen if De Beers will now get a smaller cut of that.
De Beers is not the dominant force in global diamond sales that it once was through its Central Selling Organisation, which in effect gave it a coveted monopoly. But it remains an important company in the Anglo stable. Its underlying Ebitda (earnings before interest, taxes, depreciation and amortisation) of about $1.4-billion in 2022 accounted for almost 10% of Anglo’s total on that front. DM