Botswana and De Beers sign agreement to continue Rich Diamond Partnership
A Botswana government official and the CEO of De Beers, the international diamond conglomerate, signed interim agreements on Saturday to continue a lucrative, decades-long diamond mining partnership that has seemed to fizzle in recent months.
Just minutes before midnight on Friday, the parties announced that after years of negotiations, they had agreed in principle on a deal to renew a partnership that provides De Beers with the majority of its diamonds and the government of Botswana from the majority of its income.
Details of the deal were still being worked out, government and De Beers officials said. But it is addressing one of the Botswana government’s main complaints, regarding the share of diamonds it receives in its joint venture with De Beers. Under the old agreement, Botswana received 25 percent of the raw stones extracted, with De Beers taking the rest. Now Botswana will immediately get a share of 30 percent and that will rise to 50 percent within ten years, according to De Beers and government officials.
De Beers said in a statement it had agreed to invest a whopping $825 million over the next 10 years to help develop Botswana’s economy. The deal also includes the establishment of an academy in Botswana that will train locals in diamond trading skills, government officials said.
The government of Botswana, the world’s second-largest diamond producer, hailed the agreements as a landslide victory for the country of 2.4 million, saying they would enable the South African nation to achieve its long-term development goals.
“I have to say with excitement that these are transformational agreements,” Lefoko Fox Moagi, the minister of minerals and energy, said Saturday as he sat next to De Beers CEO Al Cook to sign the deals. “These speak to the aspirations of the people of Botswana.”
This year, Botswana President Mokgweetsi Masisi caused a stir when he made the unusual move of publicly criticizing the deal with De Beers, saying his country was essentially being ripped off.
“We must refuse to be enslaved,” he said at a community meeting in a rural village in May.
Mr. Masisi and other government officials demanded that Botswana receive more than 25 percent of the rough stones and that De Beers make some investments to expand other areas of Botswana’s diamond industry, including cutting and polishing, jewelery making and retail. .
By challenging De Beers to give them more, Botswanan officials pushed for a broader demand from African countries to extract more from the natural resources that belong to them. There is a long history of countries on the continent losing their resources through theft, corruption and mismanagement.
Mr. Cook said Botswanan government officials were clear about the need for De Beers to invest beyond diamonds and into the knowledge economy, develop the diamond value chain and put the country’s people first.
“I believe the deal we’ve agreed does all of that,” Cook said at the signing ceremony.
The government said the sales agreement, which deals with how the diamonds are allocated, had been extended until 2033. Separately, De Beers’ mining license was extended until 2054, giving the company some assurance that it would have a long-term future in the country.
Despite the government’s demands for a fairer deal, few would argue that diamonds have already transformed Botswana in ways that many African countries can only envy.
In 1966, the year De Beers first discovered diamonds in Botswana and the country gained independence from Britain, Botswana was one of the poorest countries in the world, with only about seven and a half miles of paved roads. Now, according to the World Bank, it is considered an upper-middle-income country, with a robust infrastructure and the sixth highest economic output per person. The partnership with De Beers generated approximately $2.8 billion in revenue for Botswana last year.
But the World Bank also ranks Botswana as one of the most unequal countries in the world, and Botswana residents and government officials have said they deserve to earn more from the diamonds buried in their soil to address ongoing social problems.
Yvonne Mooka contributed reporting from Mahalapye, Botswana.