De Beers, the world’s largest diamond mining company, has signed a 10-year sales agreement and a 25-year lease deal with the Republic of Botswana that will shift the landscape of the diamond industry. With this agreement, the diamond trade will experience a noticeable change in dynamics, ensuring a steady supply of natural rough diamonds for three decades.
According to a joint statement released on Sunday by De Beers and the Botswana government, the agreement covers the sale of Debswana’s rough diamonds for a 10-year period through 2033, as well as the extension of Debswana’s mining licenses for a 25-year period through 2054.
De Beers has increased Botswana’s stake in the project from 30% to an impressive 50% under the terms of this deal. The agreement was made official at the end of June 2023, following months of intensive negotiations.
Significant milestone for Botswana diamonds
De Beers Executive Vice President, Paul Rowley, expressed his enthusiasm about the new chapter, stating, “Last week, at the end of June, we agreed in principle a 10-year sales agreement and a 25-year new lease agreement for the assets commencing 2029, with the Botswana government.” This deal secures the natural rough supply chain for the foreseeable future, marking a significant milestone for both parties involved.
The Republic of Botswana and the De Beers Group, in partnership with Debswana, lead the initiative. As Mr. Rowley noted, “From 25-30% in the first year of signing, we went for about 40% and then we moved to 50% for 10 years with Debswana production.” But that’s not all; De Beers has also set its sights on expanding its reach to explore new diamond-rich territories, with potential mining opportunities in countries such as Angola, Canada, and South Africa.
Botswana diamonds: Diamonds that are mined in Botswana. Botswana is the world’s largest producer of diamonds by volume, and its diamonds are known for their high quality. The mines in Botswana where diamonds are extracted. Some of the most famous Botswana diamond mines include Jwaneng, Orapa, and Letlhakane. Diamonds from Botswana are generally considered to be conflict-free. This is because the Botswana government has strict regulations in place to prevent the sale of conflict diamonds.
Botswana blue diamond: A rare type of diamond that is found in Botswana. Botswana blue diamonds are known for their deep blue color and high clarity.
De Beers lab grown diamonds: Diamonds that have been grown in a laboratory by De Beers. De Beers is one of the leading producers of lab-grown diamonds in the world.
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Botswana is the second-largest diamond producer
Until 2033, Debswana’s rough diamond production will be sold under this groundbreaking agreement. In addition to this, both parties have agreed to extend Debswana’s mining licensing deal by 25 years, securing their collaboration until 2054. Only behind Russia, Botswana is the second-largest diamond producer in the world thanks to this partnership.
A joint statement issued by the Government of the Republic of Botswana and the De Beers Group expressed their mutual optimism: “The transformational new agreement between the Botswana Government 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.”
While the finer details of the contract have yet to be disclosed, key highlights include a commitment to increase the share of Debswana supply sold through the Okavango Diamond Company (ODC).
Agreement between Botswana and De Beers
Over the course of the contract, ODC’s share will progressively rise from 30% to an impressive 50%. Debswana’s rights to rough diamonds were also a point of contention during negotiations, with Botswana’s president Mokgweetsi Masisi pushing for a larger share.
De Beers, however, argues that through taxes and royalties, the government already receives a substantial portion of the diamond mines’ profits. This new agreement also encompasses substantial long-term capital investments aimed at bolstering Debswana’s position as one of the world’s foremost diamond producers and Botswana’s largest private employer.
An initial investment of approximately $75 million into the Pula Diamonds for Development Fund, with similar contributions projected to reach up to $750 million over the next decade, represents a substantial commitment to the growth and development of the diamond industry in Botswana.
The agreement’s crowning achievement lies in its promise to generate tens of thousands of new jobs in Botswana, fostering growth in both the diamond industry and emerging sectors, with a strong emphasis on nurturing a knowledge-based economy.
As De Beers and Botswana solidify their enduring partnership, the diamond industry can only anticipate a brighter, more prosperous future. This historic agreement not only secures the supply of precious gems but also lays the groundwork for economic growth and innovation in Botswana. The world watches with bated breath as this transformative partnership unfolds, bringing prosperity and opportunity to the heart of Africa.
