Botswana’s President, Mokgweetsi Masisi, stated that his country will not back down from its demand for a bigger share of rough diamonds from its joint venture with De Beers.
This comes as talks for a new sales deal appear to be stalling. Botswana and De Beers mine the precious stones through their equally owned, 54-year-old mining venture, Debswana Diamond Co. The current diamond sales deal has been in place since 2011 but is set to expire next month.
De Beers, a unit of Anglo American, acquires 75% of Debswana’s production, while the remaining 25% is sold to the State-owned Okavango Diamond Company. Masisi wants Botswana to sell more diamonds outside the De Beers channel.
“Our agreement with De Beers is very restrictive to us. We signed it at a time when we didn’t know much, but now our eyes are open,” Masisi said at a community meeting in Mmadinare, 400 km north-east of the capital, Gaborone.
Although the government has not publicly stated what share it seeks, it is believed to be as high as 50%, double the current allocation. Masisi hinted at the possibility of litigation over the sales agreement, stating “even if we lose the litigation, our diamonds will remain ours and we will never give in,” said Masisi.
Last month, Masisi threatened to walk away from talks to renew the sales deal unless Botswana gets a larger share of output from the joint venture. He did not specify the size of the share it sought.
Masisi told reporters at the time that Botswana had denied itself the opportunity to sell its own diamonds through the 54-year-old joint venture agreement.
He added that the experience of selling diamonds outside the De Beers system, which sells unpolished, or rough, stones, had shown that Botswana could get more revenue.
“Besides the fact that the diamonds are ours, it doesn’t make sense for us to continue to relegate ourselves to participating in the rough space only. So, it’s only logical that we want more and we are going to get more. But through negotiation,” Masisi said.
De Beers says Botswana receives more than 80% of returns from Debswana, after taxes and royalties are factored in, and has expressed confidence that its five-decade partnership with Botswana will continue, on terms “that make economic and strategic sense for both parties”. De Beers, a global diamond market leader, has not yet commented on Masisi’s latest statement.
Botswana is playing hardball in its ongoing negotiation with De Beers regarding diamond sales. Masisi’s stance may be driven by upcoming elections, and De Beers will have to decide whether to accept the demand or risk losing its partnership with Botswana.