Govt rebuffed offer to up stake in De Beers
Pauline Dikuelo | Friday April 1, 2016 15:35
In 2011, Anglo American bought the Oppenheimer family’s 40 percent stake in De Beers for $5.1 billion in cash, ending the dynasty’s 80-year ownership in the world’s largest diamond miner.
The transaction increased Anglo’s holding in De Beers to as much as 85 percent, with the remainder held by government.
Addressing parliament this week, Minister of Minerals Energy and Water Resources, Kitso Mokaila said the government was offered a chance to increase its stake in De Beers but declined, as it did not make commercial sense at the time.
The additional 10 percent shareholding, which could have increased government shareholding in De Beers from the current 15 percent to 25 percent, was worth an estimated $1.28 billion.
According to Mokaila, the sale of the Oppenheimer shares in De Beers to Anglo American has not affected the partnership between the government and De Beers. “We are satisfied with the partnership and diamond sales, safe for the ongoing market challenges which in our view are due to external factors and are outside the control of De Beers,” said Mokaila.
He added that prices of all commodities, including those that De Beers had no interest in, had been falling over the last few years. Following the acquisition of De Beers stake by Anglo American, the prices of rough diamond prices have generally decreased.
The minister said that the collapse of some local diamond cutting and polishing companies couldn’t be solely attributed to prices.
“While it is true that prices of rough diamonds have an impact on the viability of the cutting and polishing industry, it is important to also note that there are other factors impacting the industry over and above the price of rough diamonds which include productivity and terms and conditions of borrowing set by financial institutions.”
Mokaila said the pricing of diamonds, like all other commodities, was driven by demand and supply. He said when the demand was high like it was during the first half of 2014, it followed that all producers would increase prices and when the demand was low the prices would reduce and that is what happened during 2015.
“It is worth stating that the diamond sales improved during the first two sights of 2016 due to reduced prices of rough diamonds,” he said.
Mokaila was responding to Gaborone North MP, Haskins Nkaigwa who asked if the minister was aware of the sale of major shares in De Beers by the Oppenheimer family to Anglo American and if so whether the government was not given an opportunity to also buy the shares and why.
Nkaigwa had also asked how the sale of major shares in De Beers to Anglo American affected the partnership and current status of diamond sales in the country and if the minister was aware that an acquisition of a major stake in De Beers by Anglo American resulted in an increase of rough diamond prices.