After protracted negotiations, De Beers and the government of Botswana have finally set pen to paper, signing an agreement to extend their diamond partnership for another decade.
The sales agreement for rough from Debswana — the government’s joint venture with De Beers — will be in effect for the next 10 years, De Beers said Tuesday.
Under the deal’s terms, 30% of Debswana production will go to state-owned trading business Okavango Diamond Company (ODC) for the first five years, after which the figure will move to 40% for the second half. The two parties have agreed on a further five-year extension period if “certain criteria are met.” During that phase, the share of rough will move to a 50-50 split between De Beers and ODC.
The agreement also extends Debswana’s mining licenses by 25 years, from August 2029 to July 2054. The joint venture operates the Jwaneng, Letlhakane, Damtshaa and Orapa mines.
“We are proud to announce the signing of this landmark new agreement, which will underpin the success of our diamond industry as we enter an exciting new phase of Botswana’s sustainable economic development,” said Bogolo Joy Kenewendo, Botswana’s minister of minerals and energy. “We hope these agreements will bring some level of stability and rebuild market confidence in the diamond industry.”
The remaining terms of the contract follow the “agreement in principle” that the two parties signed in July, with a focus on supporting Botswana’s economic development and advancing its diamond industry.
De Beers has agreed to create a diamond development fund to help the country diversify and create new jobs. That project would see the miner invest BWP 1 billion (around $75 million) up front, followed by further contributions from its Debswana dividends based on the joint venture’s performance.
De Beers would also create a package of initiatives to keep more of the diamond business within the country and increase Botswana citizens’ participation. These include De Beers investing in a diamond-jewelry manufacturing facility, establishing a grading laboratory, and setting up a diamond-based vocational training institute. The mining giant and the government will also co-invest in marketing campaigns to boost demand, a project that would span the life of the current sales agreement.
“We are delighted that this extraordinary diamond partnership is secured for decades to come, affirming De Beers’ leadership position and providing reassurance across the entire diamond value chain,” said Duncan Wanblad, CEO of De Beers parent company Anglo American. “These agreements provide long-term stability for both partners as they work together to support the rough-diamond market’s recovery from a period of challenging trading conditions.”
That renewed certainty “also forms a critical step toward De Beers’ next chapter as an independent company and as the world’s most iconic diamond business,” he added — a reference to Anglo American’s plans to divest itself of De Beers.
The parent company has been seeking a buyer for the diamond miner for nearly a year, a process it said last week was “well underway” as it reported its most recent results. In that report, it announced that it had reduced De Beers’ book value by $2.88 billion due to the weak market, putting the miner’s carrying value at $4.1 billion. Anglo also wrote down De Beers’ value by $1.56 billion at the end of 2023. The company’s revenue for 2024 fell 23% to $3.29 billion, and it saw a net loss of $288 million.
The full De Beers press release on its agreement with Botswana can be found below:
Image: De Beers CEO Al Cook and Bogolo Joy Kenewendo signing the agreement. (De Beers)
