Botswana wants quick separation of De Beers from Anglo, says Masisi


Gaborone — Botswana is hoping for a quick separation of De Beers from the Anglo American group before the UK-listed diversified mining giant is exposed to a possible hostile takeover, President Mokgweetsi Masisi says.

Botswana, the world’s top diamond producer by value, is finalising a new 10-year gem sales deal agreed last June with De Beers. The two parties had agreed to finalise the deal by June 28 this year, but the proposed takeover of Anglo by the BHP Group has brought uncertainty to the sales agreement.

Anglo has rebuffed BHP and on Wednesday rejected the Australian company’s request for more time to discuss its latest $49bn takeover offer. Anglo plans to divest from De Beers and its other coal, nickel and platinum assets to focus on energy- transition metal copper.

Masisi said he would meet Anglo and De Beers executives at jewellery industry trade event the JCK Show in the US this week.

“One thing we don’t want is a hostile owner. We are watching this very closely because whoever buys Anglo, if it is sold, will then be the owner of De Beers and De Beers is our strategic partner with whom we are at the tail end of our negotiations,” Masisi told reporters.

Botswana is a 15% shareholder in De Beers and accounts for 70% of the company’s annual rough diamond supply.

Foreign exchange earnings

The renewal of the sales deal and mining rights for Botswana and De Beers’ joint venture mining company, Debswana, is vital to Botswana, which gets about 40% of its revenue, 75% of its foreign exchange earnings and a third of national output from diamonds.

“We have received some assurances and the reason for travelling is to go and get that first hand from the principals of Anglo and De Beers that they are committed to separating De Beers from Anglo before Anglo is sold, if it is sold,” Masisi said.

Botswana needs to finalise the deal with De Beers so that it can begin to benefit from the renegotiated terms agreed in June 2023, which include a higher allocation of rough diamonds from Debswana to the state-owned Okavango Diamond Company and a $750m investment by De Beers in other economic sectors over the next 10 years.

Meanwhile,  Masisi on Wednesday also called synthetic gems a threat to the country’s economic lifeblood, as the government readies to launch a $6bn project to extend the life of its flagship Jwaneng diamond mine.

The natural diamond market has struggled in the past two years due to rising consumer demand for cheaper lab-grown diamonds, coupled with global macroeconomic volatility.

Botswana is a leading producer of ethically and responsibly sourced diamonds, and is looking to safeguard its market share for natural diamonds.

According to industry watchdog Kimberley Process Certification Scheme data, Botswana produced 20% of the world’s total rough diamonds in 2022, behind Russia. The Southern African country is, however, the world’s top diamond producer by value.

“If lab-grown diamonds take our space, then you and I are finished,” Masisi told reporters as he departed for the US.

He added he would wage “a peaceful assault against lab-grown diamonds, to give confidence to our partners and dampen any attraction to lab-growns”.

Botswana and its partner De Beers plan to launch the first phase of a $6bn project on June 28 to extend the Jwaneng mine’s lifespan from the current 2032 horizon to 2054.

The first phase, expected to cost $1bn, will establish a drilling platform to make comprehensive sampling of diamond-bearing rock easier. It will also develop essential infrastructure to support further stages of the project.

Jwaneng, in operation since 1982, produces an average
11-million carats per year, employing 2,100 permanent employees and 3,200 contractors.

At the show, Masisi also plans to lobby the US against plans by the Group of Seven (G7) countries to ensure all diamonds entering the bloc pass first through Antwerp in the Netherlands for certification.

The US, which consumes about 40% of the world’s diamonds, is leading the push for certification as part of sanctions imposed on diamonds from Russia after its invasion of Ukraine. 

Update: May 30 2024
This story has been updated with new information. 

Reuters





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