De Beers Botswana Sales Agreement
De Beers Botswana Sales Agreement: What You Need to Know
De Beers, the world’s largest diamond producer, has a long-standing presence in Botswana. The Botswana government has a 15% stake in De Beers’ local subsidiary, Debswana, and the two entities have partnered on numerous occasions to advance their shared interests in the diamond industry.
The most recent partnership between De Beers and the Botswana government took the form of a sales agreement. In 2020, the two entities signed a 10-year deal that would see De Beers sell diamonds from its mines in Botswana to the government-owned Okavango Diamond Company (ODC). The agreement came into effect in April of that year.
Under the terms of the agreement, De Beers will make available up to 10% of its global rough diamond sales to ODC. The sales will be conducted through 10 auctions each year, and the price paid will be based on the prevailing market value of the diamonds.
The goal of the agreement is to increase the amount of revenue that stays within Botswana’s borders. Prior to the agreement, De Beers sold its diamonds through auctions in London and Mumbai. While Botswana received a share of the revenue from those sales, the majority of the profits went to De Beers and its parent company, Anglo American.
The new arrangement ensures that a larger portion of the revenue from Botswana’s diamond industry will remain in the country. The government hopes that this will lead to increased investment in local businesses and infrastructure, as well as the creation of new jobs.
The agreement has been praised for its potential to benefit Botswana’s economy. However, some critics have raised concerns about the potential impact on competition in the diamond industry. De Beers is already the dominant player in the market, and the agreement with ODC could further solidify its position.
Additionally, some have questioned the transparency of the sales process and whether ODC will be able to competitively price the diamonds it acquires from De Beers.
Despite these concerns, the De Beers Botswana sales agreement remains a significant development in the diamond industry. It has the potential to benefit Botswana’s economy and could serve as a model for similar arrangements in other countries where diamond mining is a significant industry.