De Beers and Botswana strike deal on diamond sales after tense talks

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De Beers has renewed a deal to market diamonds from Botswana after negotiations with President Mokgweetsi Masisi’s authorities went all the way down to the wire over the continuation of a 54-year partnership between certainly one of Africa’s richest nations and the world’s largest diamond firm by worth.

The 135-year-old firm owned by Anglo American struck an “settlement in precept” with the Botswana authorities late on Friday for a brand new 10-year gross sales settlement of tough diamonds produced by their Debswana three way partnership and a 25-year extension to its mining licences.

The 2 events mentioned in a joint assertion that the “transformational” new settlement “displays the aspirations of the individuals of Botswana, propels each Botswana and De Beers ahead, and underpins the way forward for their Debswana three way partnership by way of long-term funding”.

The earlier deal struck in 2011 gave the southern African nation 25 per cent of diamond output to promote, whereas the rest went to De Beers. These phrases would keep in place beneath an interim settlement whereas a proper deal is being finalised, the 2 events mentioned.

Masisi’s authorities signalled that it had been able to stroll away if it didn’t obtain a greater manufacturing share within the talks with De Beers, which is 15 per cent owned by Botswana. De Beers relied on the nation for about 70 per cent of its tough diamond provide, or 24mn carats, final yr.

In return, diamond mining contributes a 3rd of the landlocked nation’s gross home product and has powered its rise to change into Africa’s sixth richest nation per capita. Solely Russia produces extra of the valuable stones.

Masisi’s Botswana Democratic get together is looking for in elections subsequent yr to keep up the grip on energy it has held since independence in 1966. Masisi mentioned he desires to maneuver the nation additional up the worth chain of diamonds, from mining to internet hosting extra reducing and sharpening of the stones in Botswana itself.

De Beers has lengthy argued that Botswana receives many of the worth from its diamonds when taxes and royalties are included.

The way forward for the connection has been sophisticated by uncertainty over the prices of extending the lifetime of Jwaneng, Debswana’s flagship and the world’s largest diamond mine, analysts say.

The settlement comes after a difficult 4 months since Al Cook dinner took cost of De Beers, because the diamond mining business additionally faces a push by G7 nations to introduce a traceability system to determine Russian diamonds.

The negotiations have raised uncertainty over the strategic worth of the diamond miner for Anglo American. Berenberg analysts mentioned final week that “Anglo American ought to query whether or not De Beers ought to stay within the group portfolio for quite a few causes”, together with the chance of poorer financial phrases ensuing from the negotiations.

Botswana elevated stress on De Beers by agreeing a deal — not but finalised — to take a 24 per cent stake in Belgian diamond producer HB Antwerp, which may provide the nation another strategy to market its diamonds.

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