State-owned diamond trader, Okavango Diamond Company (ODC) will now get a 30% allocation of Debswana’s output, rising to a maximum of 50% in the next 10 years, under the agreement sealed with De Beers, top officials involved in the extensive negotiations have revealed.
Speaking live on Btv today, Minerals and Energy minister, Lefoko Moagi, together with the Permanent Secretary to the President, Emma Peloetletse and Minerals permanent secretary, Ellen Richard-Madisa, said the increase to 30% from 25% had been signed upon and took effect immediately. The gradual phasing up to 50% has been agreed upon tentatively.
The two parties released a joint statement in the early hours of today, shortly after the June 30 midnight deadline for talks, indicating that an agreement had been reached in principle, on a new 10-year sales agreement for Debswana’s rough diamond production through to 2033, and new 25-year Debswana mining licences through to 2054. While the partners finalise the implementation of the formal sales and mining agreements, an interim agreement will preserve the terms of the most recent sales agreement which expired on 30 June, the two parties said.
Speaking to state television this afternoon, permanent secretary to the President, Emma Peloetletse, said an understanding had been reached that the allocation to ODC would reach 50% in a phased manner, which would support the local expansion of the diamond value chain and the engagement of citizen investors.
“We have mines such as Orapa and what has been happening is that these stones go to the Diamond Trading Company Botswana which we own with De Beers, and that company sorts them and values them, then offers ODC to buy up to 25% and De Beers 75%. “Now we are saying because as government we want jobs for our children, DTCB will say ODC take your 50% and De Beers take yours. “We have agreed on that and what’s left is that we will take this allocation but bit by bit according to our ability because if we just take it all at once, without a plan about how to sell them, the prices of diamonds will fall. “We have said we will not pass 10 years without getting to that 50% but as we signed, we immediately start with that 30% and then increase, but in a phased manner,” she said.
For his part, Moagi explained that the two parties had signed a commitment to purchase from Debswana and also sealed other agreements on getting returns from the valuation of diamonds rising within 40 days of purchase.
He added that while there were concerns about competing in the market with De Beers, Botswana could not have its hands tied in the search for greater value for diamonds that it is entitled to independently market.
“It’s the same as when you have a car and you know where you can sell it to get the greatest value,” he said. “You cannot tie my hands on how to sell whether that’s auction, spot sales or contract sales. “De Beers has their price book but if someone comes and says my price is 40% better, why would we not sell? We may be able to get better prices selling it ourselves. “We are still together with De Beers even in increasing that marketing spend together and we have our 15% equity in De Beers.”
Other agreements reached include:
- Establishing a diamond for development fund to be funded to the tune of P1 billion by De Beers - Jointly processing exceptional or special stones emerging from the mines - Jointly exploring for diamonds across the world - Setting up a talent council where Batswana will be taught diamond grading, pricing etc with an initial intake of 350 trainees - The ODC setting aside a portion of its allocation for uptake by Botswana owned citizen entities - Funding arrangements for the expansion of Debswana mines, which include the underground project planned for Jwaneng and deepening of the Orapa open cast
