Debswana’s contribution to the economy rose seven percent to US$1.73 billion (P18.4 billion) in 2018, helped by the highest production figures for the mines since 2014. On Wednesday, Anglo American, the controlling shareholder in De Beers, revealed that Debswana’s total economic impact was higher across nearly all the individual factors calculated to measure the diamond giant’s contribution.
These factors include taxes paid including royalties, procurement, wages, capital investment and corporate social responsibility.
The report covers Anglo American’s economic impact contributions in the 12 countries it operates in around the world. In Botswana, Anglo’s impact is through its 85% holding in De Beers, which in turn holds 50% equity in Debswana.
Anglo’s impact is thus largely a report on Debswana, although De Beers also has an office and exploration projects which very minimally contribute to the employment, procurement and capital investment figures reported by Anglo.
According to the report, in 2018 Debswana’s corporate taxes reached US$448.8 million (P4.8 billion) up from US$429 million in 2017, while royalties also paid to government, rose to US$327 million (P3.5 billion) from US$318 million the prior year. Total procurement was US$672.8 million (P7.2 billion) in 2018, down slightly from US$681 million in 2017, while capital expenditure rose to US$98.6 million (P1 billion) from US$79 million in 2017. Of the total procurement in 2018, 82% was from local sources in 2018, compared to 83% in 2017. The diamond giant spent US$86 million (P913 million) on wages and related payments in 2018 compared to US$79 million the prior year. “This report demonstrates the enduring nature of our economic contribution to society and our commitment to the countries in which we operate,” said Anglo American chair, Mark Cutifani.
“It also supports our aim of being a trusted corporate leader and more specifically, a leader in transparency – going beyond the requirements of the transparency initiatives to which we adhere.”
Anglo’s improved contribution in Botswana was powered by 24.1 million carat production in 2018, more than six percent higher year-on-year and the highest output since 2014. The higher output helped revenues rise four percent at De Beers to $6.1 billion.
Although Debswana is again targeting 24 million carats this year, analysts have warned that the build up of rough diamonds in the midstream and tightening margins amongst cutters and polishers could upset those plans.
De Beers and other major diamond producers have reportedly already reduced their rough diamond prices thus far this year. Debswana managing director, Albert Milton said the diamond giant was ready. “If the markets were to change adversely, we would have to adjust appropriately,” he told BusinessWeek earlier this year.