LDN - Business

Botswana, the country with the biggest diamonds, gets an improved 10-year deal with miner De Beers

[February 26, 2025] By SELLO MOTSETA

GABORONE, Botswana (AP) — The Botswana government signed a new diamond sales agreement crucial to its economy with the De Beers mining company on Tuesday after seven years of negotiations.

The deal gives the government an increasing share of diamond sales through the Debswana company — its joint venture with De Beers, a subsidiary of Anglo American.

Botswana, a sparsely populated and arid country in southern Africa, is the biggest producer of diamonds by value and the second biggest by volume behind Russia. Diamonds account for around 80% of Botswana's exports and a quarter of its GDP, according to the International Monetary Fund.

But a decline in the price and demand for mined diamonds has badly hampered the Botswana economy and was a central issue in a national election last year. The party that had ruled for 58 years since independence from the British was voted out in a stunning result that was largely a reaction to new economic hardships related to the downturn in the diamond industry.

The new 10-year sales agreement gives the government a 30% share of Debswana's sales up from 25% for the first five years and a 40% share for the following five years. There is an option for a five-year extension to the agreement, the two parties said, when the share of sales will be 50-50.

In return, De Beers was awarded a 25-year extension to its mining licenses in Botswana from 2029 until 2054.

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A person holds a 2,492-carat diamond which was found in the country and on show, in Gaborone, Botswana, Thursday, Aug. 22, 2024. (AP Photo, File)

The two parties had broadly agreed terms for the deal in 2023 but had yet to sign. Finalizing the agreement was a priority for new Botswana President Duma Boko, who came into office after the October election.

“We are people of durable relationships,” Boko said at a contract signing ceremony. “We have us a good deal and we trust that it will carry us into the future."

Botswana has unearthed all of the world's largest rough diamonds over the last decade, including a 2,492-carat stone discovered last year that was the second-biggest diamond ever dug out of a mine and the biggest in more than a century. That gem was found by Canadian mining firm Lucara.

Debswana found a 1,098-carat diamond in 2021 — its biggest to date.

But Debswana's total sales in the first nine months of 2024 were $1.53 billion, according to the Botswana central bank, down more than 50% from $3.19 billion during the same period in 2023. The World Bank says that Botswana's reliance on diamonds has made its economy vulnerable.

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