Govt forges ahead with HB deal

Shining bright: Diamonds are the economy's mainstay
Shining bright: Diamonds are the economy's mainstay

President Mokgweetsi Masisi says government is conducting “detailed legal and commercial due diligence studies” in order to finalise the purchase of a 24% equity stake in Belgian diamond firm, HB Antwerp.

The deal was shrouded in doubt last month after Lucara terminated its own 10-year agreement with HB, citing “material breaches of financial commitments”. Prior to that, the Belgian diamond trader was shaken after one of its co-founding partners initiated a lawsuit alleging he had been kicked out of the firm.

Last month, when asked by Mmegi whether the termination of the Lucara deal would have an impact on government’s own negotiations with HB, Masisi said government would “determine the course it would take”

Earlier today when delivering the State of the Nation Address, the President said the deal was still on track.

“I am happy to announce that due process of detailed, legal and commercial due diligence is now ongoing to finalise the deal,” Masisi said.

The President’s statement will provide comfort to HB Antwerp, which faced an existential crisis after the termination of the Lucara deal. Lucara was HB’s sole customer and the termination of the deal came without the finalisation of the talks with government.

Masisi has previously revealed that government wants to offer HB ten percent of the Okavango Diamond Company’s annual carats, an arrangement which would involve at least 600,000 carats annually from the state-owned diamond trader.

HB and Lucara had an agreement under which rough diamonds 10.8 carats and larger from Karowe Mine were sold to HB at prices based on the estimated polished outcome of each diamond, rather than the industry standard of using the rough price. The estimated polished value was determined through state-of-the-art scanning and planning technology, with an adjusted amount payable by HB to Lucara on actual achieved polished sales, less a fee and the cost of manufacturing.

Government was using the HB/Lucara arrangement as a dipstick for its own equity deal. Masisi has also said the HB Antwerp deal would give Botswana access to values in the diamond downstream, increasing the country’s revenues from diamonds.

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