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Botswana President demands improved deal from De Beers
Botswana President Mokgweetsi Masisi has criticized the current partnership with diamond producer De Beers and is demanding a better deal. The current arrangement, which expires next month, gives Botswana 25% of rough diamonds mined under its partnership with De Beers, and the rest goes to the company. Negotiations are underway for a renewal of the agreement, in which Botswana is seeking a higher stake of the profits. Botswana provides De Beers with 70% of its rough diamonds.
Not a Permanent Agreement
Masisi has ramped up pressure on De Beers since February. Speaking in Mmadinare, northeast of the capital, Gaborone, on Thursday, he emphasized that negotiations might stall, saying: “It is either we accept the situation as it is and continue getting leftovers, or alternatively we dig in and, no matter how tough it is, demand what is ours, even if we lose through litigation.” With Botswana due to hold its general election next year, Masisi stated that he would be willing to lose over the sensitive issue. De Beers has not commented on the situation.
Botswana Wants Greater Involvement in the Diamond Value Chain
Masisi noted that the current agreement restricts Botswana to trading only in rough diamonds and the country wants to be involved in the entire diamond value chain, including mining, sorting, cutting, polishing, jewelry creation, and sales, which could earn Botswana nearly $100 billion, which is why it wants a better deal with De Beers.
Belgium-based Diamond Expert Weighs In on Situation
Belgium-based diamond expert Hans Merket believes that Botswana’s threats to pull out of the De Beers deal have made the industry skittish. He thinks that the long-standing deal between Botswana and De Beers may not be in jeopardy, and instead, believes that it’s part of the negotiating tactics to get a better deal rather than to risk breaking it. He predicts that “both De Beers and Botswana need each other to divorce.” Merket warns that because of Botswana’s prominent role in the sector, the value chain can be affected by protracted talks.
Russia and Ukraine Situation Affecting Diamond Industry
Botswana is the second-largest diamond-producing country in the world, and Debswana accounts for over 90% of that production. Russia is the other significant producer country. However, buyers have been shunning diamonds mined in Russia following Moscow’s 2022 invasion of Ukraine. As a result, troubles with diamond supply from Botswana due to protracted talks with De Beers would be felt globally.
