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Botswana and De Beers agree on new diamond sales deal

Botswana, the world’s top diamond producer by value, and De Beers Group, have agreed on a new diamond sales deal following President Eric Masisi’s protest. The country will gradually increase its share of rough stones from their joint venture Debswana to 50% over the next decade. The Botswana government and De Beers have agreed on a 10-year sales deal for Debswana’s rough diamond production until 2033 and a 25-year Debswana mining licence valid until 2054.

Debswana is jointly owned by the Anglo-American unit and the Botswana government, and has been selling 75% of its output to De Beers. The remaining stones are taken by Botswana’s state-owned Okavango Diamond Co.

Under the new deal, Okavango Diamond Co will receive 30% of produce from Debswana from the start of the contract, which will be scaled up to 50% in the last year of the agreement, Reuters reported. De Beers said in the statement:

From the start of the new contract period ODC will receive 30 per cent of Debswana production, progressively increasing to 50 per cent by the final year of the contract, ensuring a sustainable transition path for both partners.

In addition, De Beers will invest $75 million towards a diamond fund that will benefit the Botswana economy.

Botswana President Mokgweetsi Masisi had threatened to sever ties with the mining company if the government’s concerns were not reflected in the new deal.

The new Botswana-De Beers agreement enables the partners to make the necessary investments to maintain Debswana’s position as a top gem producer, according to De Beers.

Botswana, where De Beers has been operational for five decades, heavily depends on diamonds, with two-thirds of its foreign currency receipts derived from mining and sales related to the precious stone.

Africa is richly endowed with vast natural resource deposits, but unfortunately, it has little to show for it as most of these resources are exported in their raw form. There have been increasing calls for value addition to these resources. Developed countries including China have been accused of exploiting these resources. The prices of these resources are mostly determined by Western countries, who are the primary customers. – (Pindula)

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