Africa-Press – Botswana. When Al Cook, chief executive of De Beers, promised earlier this year “an intense period of engagement” with Botswana to ensure a smooth sale of the diamond mining and sales company, he sounded sincere. De Beers has known all about the financial value of engagements since its 1947 “A diamond is forever” campaign.
But De Beers’ relationship with the African country that supplies three-quarters of its diamonds is now badly strained. Botswana’s president Duma Boko complained in July that the country was “broke” because the company was “not doing its job” of selling at high prices. “Maybe we should take over and sell them ourselves,” he said.
De Beers and Botswana have been intertwined since the country’s independence in 1966 and the foundation of its diamond mining industry the following year. While Boko’s attack sounded like the end of the affair, both sides know it would be painful to separate. Nor would it be right for either.
The sale of De Beers by its parent Anglo American moved a step closer this week with a proposed merger between the latter and Teck Resources of Canada. Anglo Teck, as the $50bn entity will be known (surely Anglo Canadian would have been more resonant?), will focus on copper and iron ore mining. Diamonds will be left to imperial history.
In one sense, Boko is right. If De Beers cannot shield Botswana from the diamond slump, and long-term decline as lab-grown diamonds made in China and polished in India affect his nation’s mining wealth, what is the company’s purpose? It rose to fame for the rough diamond cartel started by its 19th-century founder Cecil Rhodes, but it no longer wields such power.
The fall in rough diamond prices since a peak in 2022 has reduced the value of De Beers and damaged Botswana’s economy. The latter used the wealth from its resources wisely to become one of sub-Saharan Africa’s most stable and prosperous nations but now faces economic problems and a large budget deficit.
Given Botswana’s dependence on De Beers, including a 15 per cent stake in the company and joint ownership of their Debswana mining venture, it is natural to place the blame on the company. The two sides agreed a new long-term sales and licensing deal in February and the attacks on De Beers have been solely rhetorical, but national indignation is growing.
Botswana’s ultimate recourse would be to move up the value chain, not just selling stones through De Beers but cutting, polishing and marketing diamonds itself. That is tempting, given that most of the value of the global market lies in jewellery: “For too long, our diamonds have left our soil raw, and returned to us as polished stones… That era must end.” Boko said.
De Beers has entertained similar ambitions. The company offers most of its rough diamonds to trade buyers but sells some branded jewellery in its own stores after cutting and polishing by others. Cook has talked implausibly of “creating the world’s greatest jewellery maison” by opening more De Beers boutiques and taking greater control of cutting and design.
But all of this is easier said than done. De Beers is at root an industrial enterprise and Botswana is a country, not another Van Cleef & Arpels or Tiffany & Co. Not only are designing and selling jewellery different skills from mining, but it is a very competitive industry. While De Beers still controls about a third of the global rough diamond business, it is a jewellery ingénue.
It would even be a stretch for Botswana to acquire control of De Beers from Anglo American, a possibility the latter has tacitly discouraged by talking of a sale to private bidders. Botswana has appointed Lazard as an adviser and gained a $12bn investment pledge from Qatar, but it might be better off diversifying economically, rather than doubling down on diamonds.
De Beers also faces problems. Anglo American has twice written down its value and there has been talk of a diamond recovery for some time without much result. It may not prefer Botswana to take over but no buyer will sign a deal without the country’s approval. Resource nationalism has led to others revoking licences and seizing assets.
Bogolo Kenewendo, Botswana’s mining minister, told the FT in July that Anglo American had failed to manage De Beers’ sale transparently, or with government support. Perhaps so, but it is not too late. Were this a personal relationship, friends would tell both partners to patch up their differences: there is too much to lose and not enough to gain from a split.
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