Government and De Beers have formally signed agreements giving the country a higher allocation of rough diamonds from their partnership and providing for the mining giant to provide P1 billion to start a fund to diversify the country’s economy.
The deals signed on Saturday afternoon, known as heads of terms, follow an agreement in principle reached between the two sides on June 30, which came after five years of increasingly tense negotiations. At the tail end of the talks, President Mokgweetsi Masisi threatened to end the 54-year old partnership unless Botswana gained greater access to the diamond downstream market.
Officials involved in the latest developments explained that by moving from an agreement in principle, to heads of terms, the two sides were transitioning to a non-variable stage of the various conditions agreed to in June. From the heads of terms, the two sides will be able to draft and sign binding contracts on the various terms.
Under the deal, Botswana’s state-owned diamond trader, the Okavango Diamond Company, will be entitled to purchase and independently market 30% of output from Debswana, up from the current 25%. The allocation will rise to 50% over the next ten years.
The two sides also agreed to establish a multi-billion pula Diamonds for Development Fund, with an upfront investment by De Beers of P1 billion. Further contributions over the next 10 years of the deal would be made that could total up to P10 billion “which will aim to create substantial additional value to the Botswana economy”.
“This is a reminder for us as De Beers how grateful we are that you have allowed us to play a role in the development of diamonds over the last 50 years and how excited we are about the future,” De Beers’ CEO, Al Cook said in a virtual connection from London.
Minerals and Energy minister, Lefoko Moagi, said the agreements signed yesterday also cover the creation of a Talent Council where citizens would be taught downstream diamond skills as well as commercial and economic arrangements between the two.
Moagi said the signing of the heads of terms was a significant milestone.
“This is a very important step forward as we progress towards the transformational new agreement,” he said. “I ask the negotiating teams to continue working diligently to conclude the new agreements so that it comes into operation for Batswana.”
The concessions by De Beers are part of the extension of the company’s sales arrangement with government which covers the marketing of stones from Debswana by another 10 years, as well as the renewal of mining leases in the country by another 25 years from when they expire in 2029.
Other terms of the agreement in principle reached in June include: *Jointly processing exceptional or special stones emerging from the mines *Jointly exploring for diamonds across the world *Funding arrangements for the expansion of Debswana mines, which include the underground project planned for Jwaneng and deepening of the Orapa open cast
