As the deadline for the finalisation of the much-anticipated new diamond sales agreement between the state and De Beers draws near, President Mokgweetsi Masisi says the Government of Botswana "wants more".
Briefing the media yesterday, Masisi told the press "it is time Batswana get more from the diamond deal".
“When we renegotiated this agreement in 2011 ... for the first time in the history of our relationship with De Beers, we were able to open a small window," he said of the negotiations that birthed the sales deal that expires in June.
The De Beers-Government of Botswana sales deal is one of the diamond industry’s most valuable covenants. Delays in finalising the talks reportedly unnerved a broad ecosystem that includes contractors, sightholders, factories, retailers, financiers and others. However, Masisi is adamant that Botswana deserves more, and that it does not make sense for the country to continue relegating to a mere participatory role in the 'rough stones'.
He told the media government wants 10% of diamonds to be sold to what will be created as a diamond company owned completely by the Botswana government to sell the precious stones independent of De Beers.
"We wanted to discover the marketing, we wanted them to discover the market, we wanted them to discover us! And, indeed, we succeeded in some measure of discovery of that, and it taught us enough for us to now sit around the table," he said. "As we sit with De Beers and look them in eye, we are telling them, no! We can’t continue with this anymore," Masisi said. "We get an allocation of 25% of our diamonds. And now we have discovered more,” Masisi said, adding that there are opportunities downstream.
“Look, we are going to get more. The fact of the matter is that the sales agreement ended in 2019 and we have been extending it. We want more but because this is a negotiation, we will do so in a proper manner because we have been in partnership with DeBeers for so long,” Masisi said on the Botswana-De Beers negotiations. The sales deal was extended several times thereafter, initially because of the pandemic, with neither party offering any clear explanations. Meanwhile, fresh negotiations had kicked off in 2018, with both sides having established their five-member teams to work on their heads of agreement.
At its heart, the covert sales agreement between De Beers and government governs the conditions around the sale of diamonds from Debswana, the world’s top producer of rough diamonds by value, through the De Beers process.
The last such talks, concluded in September 2011, delivered by far the best deal for Botswana with the migration of multibillion-dollar diamond activities from London to Gaborone. The deal also secured an independent pricing avenue for Botswana, via the establishment of the state-owned Okavango Diamond Company, which regularly reports revenues running into hundreds of millions of dollars.
The agreement before that, in 2006, saw Gaborone secure the establishment of the 45-million carat per annum Diamond Trading Company Botswana. While the sales negotiations are a highly confidential affair, involving closely-guarded commercial terms and forecasts, government officials have publicly stated that Botswana is seeking greater access to downstream value in the diamond industry, such as jewellery manufacturing and retail.