- More Debswana diamonds will go the ODC route
- P10 billion fund to accelerate Botswana economic diversification.
- Two parties to join hands on international diamond exploration
- World class jewellery manufacturing facility to be set up in Botswana
The Projects | Diamond Mining
The Government of the Republic of Botswana and De Beers Group have reached an agreement in principle on a new 10-year Sales Agreement for Debswana’s rough diamond production through to 2033.
Additionally, a 25-year extension of the Debswana mining licenses through to 2054 has been agreed upon. This marks a significant milestone in the enduring diamond partnership between Botswana and De Beers, setting the stage for a prosperous future for both parties.
In a statement released by De Beers 1st of July, the world leading diamond producer by value, said new agreement between the Botswana Government and De Beers represents a transformative partnership that aligns with the aspirations of the people of Botswana.
It not only propels both entities forward but also secures the future of their Debswana joint venture through long-term investment. The agreement is set to revolutionize the diamond industry in Botswana and focuses on four key areas of value.
Industry leadership takes centre stage in this new chapter of the diamond partnership. The agreement aims to expand Botswana’s footprint and enhance its leadership position across the diamond value chain.
As part of this objective, the share of Debswana supply sold via Okavango Diamond Company (ODC) will progressively increase to 50% by the final year of the contract. ODC will receive 30% of Debswana production from the beginning of the new contract period, ensuring a sustainable transition path for both partners.
Securing Debswana’s position as a global diamond industry leader is another critical aspect of the agreement. The Botswana Government and De Beers both said they are committed to making long-term capital investments that will solidify Debswana’s status as one of the world’s leading diamond producers.
Debswana, being Botswana’s largest private employer, will continue to contribute significantly to the country’s economy for decades to come.
The agreement also prioritizes economic diversification in Botswana. To accelerate this diversification process, a multi-billion Pula Diamonds for Development Fund will be established.
De Beers will make an upfront investment of BWP 1 billion (approximately $75 million) in the fund, with further contributions over the next 10 years that could amount to BWP 10 billion (approximately $750 million). This fund aims to create substantial additional value for the Botswana economy.
In addition to economic diversification, the partnership focuses on job creation in Botswana. The agreement has been said to have the potential to generate tens of thousands of new jobs in both the expanded Botswana-based diamond industry and emerging sectors. A particular emphasis will be placed on supporting the growth of a knowledge-based economy, opening doors to new opportunities for the people of Botswana.
Al Cook, CEO, De Beers Group, said: “For De Beers it is a privilege to renew our half-century partnership with the people of Botswana. It is a partnership that is highly regarded around the world for the enduring role it has played in creating economic development and growth. Our transformative agreement reflects the aspirations of the country, secures the future of our Debswana joint venture, and reaffirms De Beers’ leadership position for the long-term. The agreement represents our commitment to deliver investments in Botswana’s diamond production, Botswana’s diamond value chain, Botswana’s knowledge-based economy and, above all, the people of Botswana.”
De Beers Group said while the partners progress and implement the formal Sales and Mining Agreements, the terms of the most recent Sales Agreement (which expired on 30 June) will remain in place.
P10 BILLION DIAMOND FOR DEVELOPMENT FUND
As part of the outcomes of the recently agreed deal between Botswana Government and De Beers Group, a Diamond for Development Fund will be set up with an upfront investment of P1 billion ($75 million).
In a press briefing Tuesday, members of De Beers Executive Committee explained that the fund which will see investment scale up to P10 billion in 10 years will be targeting sectors that can significantly diversify the economy of Botswana, develop other industries and create thousands of jobs for Batswana, especially the youth.
Malebogo Mpungwa, De Beers Executive Vice President underscored the high levels of employment in Botswana. “We are sitting between 20-30 percent unemployment, and we have a population of 40 percent being the youth, which means unemployment actually affects the youth more.”
Mpungwa said the Diamond for Development Fund ‘s main intention is to reduce dependency of Botswana’ s economy on a single resource. ” This fund will help in terms of accelerating economic diversification and agriculture is one sector that has the potential to be scaled up and lead economic diversification, tourism also, we will be looking at those sectors to partner with the Government and accelerate economic creation of jobs and development of knowledge based economy ” she said.
This billion-pula fund will be managed by an independent board, with executive and management teams as well as investment committees to ensure proper governance and prudent management and disbursement of the finances.
INTERNATIONAL DIAMOND EXPLORATION
The new deal will also see the two parties join hands in exploring for diamonds in other jurisdictions outside Botswana, De Beers top brass told journalists in Gaborone on Tuesday.
Botswana Government will have the opportunity to decide which area and country they have mutual interest to explore and they will have right of refusal when De Beers invests in new exploration projects.
“We have given the Government of Botswana the opportunity to engage in international exploration with De Beers. The Government of Botswana can partner with De Beers to explore and search for diamonds in Botswana and other countries of mutual interest that we agree upon. This is to ensure that when there is no longer production in the diamond mines in Botswana, Botswana will benefit from the revenue generated in other countries,” said Malebogo Mpugwa, De Beers Group Executive Vice President of Human Resources.
“We will provide the Government with the opportunity to decide which countries they are interested in. The Government has the first right of refusal regarding the areas we explore. It is an equal partnership rather than a competition.”
Mpugwa stated that the details of the agreement have not been finalised, indicating that the two parties will agree on modalities for executing the partnership in exploration.
WORLD CLASS JEWELLERY MANUFACTURING FACILITY IN BOTSWANA
Furthermore, to support Botswana’s diamond beneficiation efforts, De Beers will partner with one of its sightholders to set up a state of the art jewellery manufacturing facility in Botswana.
De Beers Executive Vice President – Diamond Trading Paul Rowley said the facility will initially create 200-250 jobs and it will deal with jewellery all the way from design to retail and ensure that Botswana plays in the downstream segments of the value chain.