the monitor

Gov't, De Beers finally conclude talks

DONE DEAL: Kenewendo and Cook after their media briefing in Cape Town on Monday PIC: AL COOK LINKEDIN
DONE DEAL: Kenewendo and Cook after their media briefing in Cape Town on Monday PIC: AL COOK LINKEDIN

Government and De Beers have finalised their long-drawn-out talks for a new sales agreement and are due to formally sign the new deal later this month, the two sides confirmed yesterday.

Addressing journalists in Cape Town at the Mining Indaba, Minerals and Energy minister, Bogolo Kenewendo, said the negotiations formally ended on Friday, about six years after they first began.

“We have concluded the talks towards a new sales agreement,” she said yesterday. “We have had long and ongoing negotiations over the last five years and as of last Friday, we have come to an end of these talks. “We hope this agreement will bring some level of stability and rebuild market confidence in the diamond industry.”

The talks, which include mining licence renewals, capital commitments to projects as well as the division of diamonds and revenues from Debswana’s mines, became increasingly tense over the years, with former president Mokgweetsi Masisi threatening to walk out of the partnership at one point.

In a joint statement, both sides said the talks concluded “in alignment with the Heads of Terms agreed on September 30, 2023”.

These terms include the renewal of Debswana mining licences from 2029 to 2052 as well as the state-owned diamond trader, the Okavango Diamond Company, being entitled to purchase and independently market 30% of the output from Debswana, up from the current 25%. The allocation will rise to 50% over 10 years.

In addition, the terms include the establishment of 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”.

Other terms include jointly processing exceptional or special stones emerging from the mines, jointly exploring for diamonds across the world as well as funding arrangements for the expansion of Debswana mines, which include the underground project planned for Jwaneng and deepening of the Orapa open cast.

At yesterday’s briefing, it was revealed that the 10-year sales agreement covering Debswana production will have a five-year optional renewal, which officials expect to make future processes smoother than the tense negotiations in recent years.

“There are a couple of aspects of the agreement that we are really proud of and the first is the Diamonds for Development programme which will set up a frame for the way that De Beers contributes P1 billion and then works with the government to support the development of Botswana and Batswana beyond diamonds,” said De Beers CEO, Al Cook.

He added: “The second aspect is the fact that this agreement sets out how government and De Beers will cooperate in the marketing of diamonds. “For the first time ever, we will have a marketing committee that jointly sets out how we market diamonds and appeal to a new generation of consumers globally.”

According to the two sides, the signing and execution of the new agreement will take place after the issuance of new mining licences and final governance approvals.

The issuance of the new mining licences is expected to be a largely “formulaic” process, which will allow the two parties to move quickly towards the formal signing of the deal.

“There’s a lot of expectations, not just from the industry, but also amongst Batswana about how they will benefit from this renewed agreement and diamonds, particularly knowing the current state of the diamond industry,” Kenewendo said. “We are hoping that the announcement of the conclusion of negotiations brings us not only to the end but the beginning of a working relationship where we can start to focus on developmental areas that are needed in this diamond industry to try and resuscitate and build market confidence. “We also need to ensure that we are not building for the past industry, but rebuilding around the structural changes that this industry is currently facing.”

The closely-guarded De Beers/Government of Botswana sales deal is one of the global diamond industry’s most valuable covenants, with the revenues providing the bulk of the country’s foreign currency receipts and about a third of budget revenues.

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