De Beers’ new owner should be the one who can fix it
Mbongeni Mguni | Wednesday December 3, 2025 14:54
It has become generally known that at least three entities are bidding for Anglo American’s 85% stake in De Beers. These include former De Beers’ executive-led consortiums, as well as sovereigns, being Botswana and Angola. Namibia, which was initially reported to be in the hunting, has since officially stated that it is still considering its position.
Botswana and Angola, De Beers’ biggest producer and its most prospective ground respectively, met recently in Gaborone to iron out an apparent clash over their individual desires to both take up a majority stake in De Beers. Ministers exclusively told Mmegi recently that the two were “perfectly aligned.”
On Tuesday, President Duma Boko, insisted that the country was determined to take over Anglo’s entire stake in De Beers and had a plan for Angola. He hinted that there were other partners around the table besides the coastal nation.
“We want to acquire the entirety of Anglo America’s stake in De Beers and we have a firm model to acquire that stake that doesn't disadvantage the country,” the President told Parliament during the State of the Nation debate. “We have partners and Angola they came here, we agreed and we said we will take what is ours then we will call you to offer you a piece of it, together with others. “It’s a way of supporting the economy so that revenues come in.”
Boko’s remarks offer a glimpse of the strategy government is pursuing to take a majority stake in De Beers. The Minerals and Energy ministry has generally shied away from engaging on the strategy publicly, a position reportedly adopted in Angola as well.
Boko’s remarks are therefore being carefully scrutinised as the race for the diamond giant reaches a critical point.
Anglo American is due to finalise a shortlist of bidders before year end, but executives there have said besides a straight sale, the group is still leaving open the option for a public listing of its shares.
Sheila Khama, a diamond industry veteran, told Mmegi it was difficult to see the option of a listing being pursued.
Khama is a former CEO of De Beers Botswana, a former non-executive director on the boards of Debswana and DTC Botswana as well as a former compliance officer at Anglo American Corporation Botswana.
“It is hard to see how a listing of De Beers under the current circumstances can be successful,” she said. “Besides, why would Anglo care at this stage?”
Other experts who spoke to Mmegi this week said the debate on who will take what in De Beers is not what the world should be focussing on. Rather, the focus should be on who can pull the industry and De Beers out of the existential challenges they are facing.
According to its last financial results, De Beers posted losses of $189 million for the half year to June 30. The diamond giant publishes its results as Earnings before Interest, Tax and Depreciation and Amortisation (EBITDA), a rough indicator of core earnings.
That performance roughly translates to losses of between one to two million dollars per day over that period, a performance indicative of the life-threatening challenges facing the company and the industry. It is also a performance that the various entities bidding for a stake in Anglo will have to contend with. As shareholders, they will be required to help out with working capital for the diamond group, while also pumping in development funds for the various projects underway globally.
That will require not only deep pockets and a long-term investment outlook, but also a strategy that turns De Beers around while simultaneously resuscitating the allure of natural diamonds.
“You don’t want to buy a business that’s losing that much and become a major shareholder and contribute, unless you know how to fix it,” said a veteran diamond industry executive.
The executive has been intimately involved in the local, regional and global diamond industry for decades and spoke to exclusively to Mmegi, on condition of strict anonymity for professional reasons.
“Before you even think about who should buy De Beers, you have to have a plan for De Beers and the industry. “People should not be obsessed with who’s buying Anglo’s stake, unless that buyer has a plan to fix it.”
According to the executive, De Beers and the industry’s troubles come down to several key historical and current issues.
The task at hand
Firstly, and as is widely known, is the encroachment of lab growns, which now account for an estimated 40% of engagement rings in the United States, the world’s biggest market for diamond jewellery. This incursion began at the small stone end of the market, but the price collapse in synthetics has meant bigger stones at ever cheaper prices. Synthetics, especially because they are often marketed as indistinguishable from naturals and branded as more sustainable, have flooded the market in recent years.
The executive said synthetics had a more latent and long-lasting impact than the obvious knock they are having at the moment on naturals.
“We should be more worried that synthetics are now 40% of the engagement market, because that segment of the market is where we first get people ‘addicted’ or sold onto diamonds, then in the future we can sell them ear studs, bracelets and other natural diamond jewellery easier. “The challenge is that if you have not gotten this market at 25 to 35 years of age and they find a fake stone three times the size for next to nothing, you’ve lost this market for the next 40 years. “Again, if this 40% of engagement market was happening in South Africa, no one would care, but the US is a trendsetter and if the US market says, this is trending, the world follows.”
Other factors that have created the “perfect storm” for natural diamonds include the tariffs by the Trump administration, the downturn in Chinese demand as well as the continued flow of sanctioned Russian diamonds in to global trade.
Speaking in Parliament, Boko told legislators that the key challenge with diamonds has been around marketing. The President specifically believes De Beers and the state diamond trader, Okavango Diamond Company, have failed in their efforts to effectively market diamonds, largely because of strategy.
“The statistics show that demand for natural diamond is very high, higher than demand for the synthetics,” he said, without providing more details on the source of the statistics. “How do you explain then a situation where this demand does not correlate with purchases? “Something is wrong here. “We engaged De Beers and the Okavango Diamond Company to sell our diamonds, to market our diamonds, but have these two delivered on this project of marketing and selling our diamonds? “We must agree that they failed.”
De Beers’ own research, together with the numbers coming out of the US market, show that increasing numbers of consumers, particularly in that market, prefer synthetics to naturals within the key bridal and engagement jewellery segment and particularly amongst smaller stones.
Boko however believes the marketing strategy has been the challenge.
“You know that there are fong kongs (cheap imitations) even in clothes or other items that are believed to be genuine. “Diamond buyers who are serious and have money, your league of billionaires, they don’t buy synthetics. “With naturals when they buy it, they want to know the story; who are the people behind the story, where does the diamond come from, how has it helped, what positive impact has it had? “This is a story that has never been told in the marketing of our diamonds. “Our diamonds have been sold as De Beers diamonds and when you say these are Botswana diamonds, nobody knows.”
He continued: “Now we are at a point where we are marketing Botswana diamonds as Botswana diamonds because that has a very powerful story behind it and it is what sells.”
According to the President, Botswana wants to take control of the marketing of its diamonds and a create a “sort of OPEC”, where it manages the industry and has influence over pricing. In those remarks, Boko once again shed light on the strategy to seek a majority stake in De Beers.
The revival
Resonating with Boko’s use of OPEC as an analogy, experts say the revival of De Beers has to start with an industry push. This, in turn, has to begin by succinctly distinguishing between naturals and synthetics in terms of rarity, real-world developmental good, measurable and traceable ESG indicators, as well as pricing.
“Turning around that 40% (in engagement rings) will only happen with really major campaigns undertaken at scale,” the expert told Mmegi. “When Apple launches a new phone, you see queues overnight and with natural diamonds, you need a campaign that evokes such. “The first point is working together and that’s why there is positivity around Botswana and Angola meeting, but the industry is also required to come to the party. “Working together gives you scale and that’s when you can put real money into this. “Before when De Beers had scale, it could put $200 million into marketing; they had the power for that.”
The industry expert told Mmegi that with De Beers’ declining dominance in the industry over the decades, the existence of a central power driving diamonds globally had diminished.
“De Beers stopped doing category marketing about ten to 15 years ago, which was representative of the industry,” the executive told Mmegi. “The government in Botswana also stopped contributing to this marketing years ago, so everyone has had a role to play in this. “In addition, there has been a lack of leadership in the industry, such that the deal between government and De Beers took six years to finalise. “The fact that Anglo is selling De Beers is a sign of a loss of leadership as well. In this business, you need an industry leader and De Beers is no longer what it needs to be. “How do you make it that scale player once again?”
Scale is something Boko agrees with. The President told Parliament that in his discussions with the industry, there have been loud cries for a global leader of diamonds, something that has also influenced the strategy to seek a majority stake.
“We must defend the diamond industry and the diamond industry is crying out. “They have told me now that they are crying out for a leader and have said ‘you have emerged as the leader of the diamond industry now.’ “I've said I'm up to the task and that is why we want to acquire a majority stake in De Beers,” Boko said.
The idea of producer nations coming together to resuscitate the industry broadly, is also supported by most analysts. Botswana, the poster-child for the ‘diamonds for development’ and a model minerals governance case study, is at the heart of the strategy.
Botswana, Angola, the DRC, Namibia and South Africa, as well as several companies and industry groups, signed the Luanda Accord in June to jointly finance a massive global marketing campaign run under the Natural Diamond Council, to resuscitate diamond demand.
Khama said partnering to leverage a common strength is important, pointing out that in the diamond industry, countries first came together to creation of the Kimberley Process in 2000.
“Keeping the Luanda Accord together and credible as can be seen with the Kimberley Process, is a different ball game,” she cautioned. “Ideally leaders are paying attention to this risk.”
The campaign under the Luanda Accord, however, appears yet to kick off, even as the industry approaches its key marketing season, the Thanksgiving, Diwali, Christmas to Chinese New Year period where the bulk of diamond jewellery and loose stones are sold every year.
Navigating sovereigns
Experts say key to De Beers’ own revival will be a technical partner with a solid resuscitation plan, possibly partnering with a sovereign.
Analysts agree that sovereign investors such as Botswana, being producers, have a strategic need to be on De Beers’ share registry. Botswana has been a 15% equity holder in De Beers since 2004 and also enjoys a level of pre-emptive rights when Anglo divests.
“As I wrote in a previous blog, politically this will resonate with citizens of the three SADC countries,” Khama told Mmegi. “But joint ventures with sovereigns and partnerships with different entities, bring different organisational cultures, divergent goals, and varying perception of value etc. “Reconciling them on the shareholder boards and in De Beers’ operations will not be a walk in the park.”
Other experts also caution that a sovereign-heavy takeover would scare away the private capital and expertise required to steer De Beers and the industry back to health.
Both Botswana and Angola have hinted that their bids for De Beers are backed by sovereign wealth funds, many of which typically take long views on their investments. However, Anglo, a shareholder in De Beers for more than 90 years, has also played a technical role, as well as providing strategic direction and leveraging on its own ecosystem to reap value from the diamond group.
Analysts agree that while the sovereigns jostle, the winning point will be to include a technically-savvy investor who can execute a winning strategy to turn the business around.
Boko this week hinted that there was a plethora of top-level advisors and experts sitting at the table with Botswana, in its bid for control of De Beers.
Experts say a technical investor would have to balance between the interests of the sovereigns, while having intimate relations with sightholders (De Beers’ direct customers), as well as strong retail ties, even extending to the extensive and powerful independent jeweller circuit in the US which is the backbone of sales there.
The private suitors for De Beers will have to build working relationships with governments, entities that are run by politicians and have broad national interests that may or may not coincide with hard-nosed commercial imperatives.
While the sovereigns would want a share, with Botswana getting a bigger stake as the majority source of the diamonds at present, a technical partner would bring in the dynamism required for a turnaround in De Beers. The alternative, having the sovereigns controlling or owning all the shareholding, would risk moving De Beers into the territory of being a State-Owned Entity, organisations that in the region are associated with under-performance, the executive who spoke to Mmegi said.
The international nature of the global diamond industry, with a host of players up and down the value pipeline, means that while sovereigns are necessary, a technical partner with the expertise to strategise around mid-stream and retail end channels, as well as marketing and distribution, is required.
For Boko, a plan already exists for turning around De Beers. Taking legislators into his confidence this week, the President said government had engaged the “finest minds” on the planet for the transaction, revealing that Anglo American was now moving to open its data room to bidders.
“Have we done due diligence? We've engaged the finest on the planet, the finest. “We've applied our minds thoroughly on this and where we are now, there's a lot of value leakage in the model that De Beers has applied. “The challenge for us is not taking over; the challenge is restructuring this thing to make it profitable and it will be done. It can be done. “The expertise is readily available and we have it around the table. “And when we go to them (Anglo), we will be well-prepared.”
Timely injection
The biggest task for whoever takes Anglo’s stake is also, somewhat, the simplest. The sheer identity or name of the successful entity, could add something the diamond industry calls the “5th C”. Traditionally diamonds are classified by Cut, Carat, Colour, and Clarity. The “5th C” is Confidence, where a well-branded nation such as Botswana, and a competent technical investor, could inject the optimism needed to support a turnaround global marketing campaign.
“Other factors, you may not be able to control, but you can control the 5th C,” the executive told Mmegi. “The 5th C can kick in within a year and the industry will breathe a collective sigh to say ‘there’s grown-ups in the room’ and something is being done. “That’s worth a lot and that contributes to a diamond that someone wants to buy and hold onto because they know the value will go up.”
With the existential battle against synthetics, a partnership between sovereigns as well as the technical investor, could yield the required results, the executive said.
“We have had six consecutive quarters of negative economic growth in Botswana and the biggest contribution that De Beers can do is to arrest this and get revenues flowing to government. “A failing De Beers is a failing Debswana and a failing Botswana. “It’s essential to have the industry turned around as quickly as possible. Fix De Beers today and you get the diamond revenues tomorrow.”
While the sale by Anglo American marks the end of an era, the acquisition currently being negotiated is the beginning of an unknown future.