Spotlight on profit split in gov't, De Beers' talks :: Mmegi Online

De Beers could “comfortably and profitably” run on a 97:3 % profit split with the Government of Botswana (GoB), high-level sources have said, as both parties prepare for the July start of negotiations towards a new sales agreement.

The current profit split gives Botswana 81% of earnings from Debswana and the De Beers the balance, through taxes, royalties and dividends.

At its heart, the sales agreement between De Beers and GoB governs the conditions around the sale of diamonds from Debswana through the De Beers process. The last such talks, concluded in September 2011, delivered by far the best deal for Botswana, with the migration of multibillion US dollar diamond activities from London to Gaborone. The deal also secured an independent pricing avenue for Botswana, via the establishment of the state-owned Okavango Diamond Company, which last year posted record sales of US$567 million.

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