New De Beers deal to pump P1bn into development fund

Mbongeni Mguni | Wednesday July 5, 2023 06:00

De Beers and government on Friday agreed to extend their sales arrangement which covers the marketing of stones from Debswana, by another 10 years, while also extending mining leases in the country by another 25 years from when they expire in 2029. The deal comes with agreements in principle which are being finalised and include efforts to better empower citizens both in the diamond value chain, as well as other non-diamond ventures in line with sustainable economic development.

The two parties have been engaged in increasingly tense negotiations since 2019, with government pushing for greater concessions that will enable the country to participate deeper down the diamond industry’s value chain, where activities such as cutting and polishing, as well as jewellery design and retail, produce greater values than mining.

In a statement on Saturday, De Beers said as part of the agreement in principle and in line with efforts to support the country’s economic diversification, a multi-billion pula Diamonds for Development Fund would be established, with an upfront investment by De Beers of P1 billion. Further contributions over the next 10 years of the deal would be made that could total up to P10 billion “which will aim to create substantial additional value to the Botswana economy”.

Minerals and Energy permanent secretary, Ellen Richard-Madisa, said it was important that Batswana feel the impact of the agreements being made with De Beers in their lives.

“These 54 years (with De Beers), we have not been able to see their footprint in helping Batswana, in areas such as education, environment, the people living around those mines, and others,” she said in a live broadcast by state television on Saturday afternoon. “In the new agreement, we have agreed that we want to see their footprint and see communities living around the mines benefiting. “When the diamonds run out, there must be something that allows them to live on, not like what happened with the Kimberley Mine (in South Africa). “From agriculture, education, to environmental matters, there must be an impact and we have said they should put money there. “They will start with P1 billion and we move from there so that after five years, we must be able to see development from that.”

Minerals and Energy minister, Lefoko Moagi, explained that the Diamonds for Development Fund would support Batswana in innovation in areas not necessarily confined to mining or diamonds. He also revealed that the agreement in principle also provided for the establishment of a Talent Council where Batswana would be taught downstream diamond skills, with an initial cohort of 350 students.

“Before, there used to be the De Beers scholarships but these were for diamond mining. “However, we want all the value chain up to pricing and valuation, as well as jewellery, cutting and polishing and others. “We want to establish a Talent Council where Batswana will be taught how to price diamonds, grade them and other skills for the diamond value chain.”

Moagi added: “The diamond business goes hand in hand with technology and we have said we want to be part of that, in line with our push for a knowledge-based economy. “Those innovation labs, IT academies and others must come to Botswana. “That is how to build an economy after diamonds run out.”

The citizen empowerment clauses in the agreement are critical for the country, as the Debswana mines deepen and come within decades of the depletion of resources. President Mokgweetsi Masisi has repeatedly said the new agreements with De Beers have to allow diamonds to support the development of a knowledge-based economy and the pursuit of his administration’s transformation agenda.

Permanent Secretary to the President, Emma Peloetletse, said the Diamonds for Development Fund would be open to investment by parties other than government and De Beers.

“The P1 billion is a start, but they have also agreed that they will bring their friends and we will bring ours so that anyone who wants to develop Botswana can come through that fund,” she told state television. “We have also said that each year, as De Beers makes profit, they will put funds into that fund.”