Africa-Press – Botswana. In this sobering analysis, Special Correspondent DOUGLAS RASBASH* looks at risks to the symbiotic future of Debswana and the country that is home to the world’s best diamonds and finds that some of them are of a scale large enough to threaten the survival of the company, the fiscal integrity of the Botswana state, and the economic stability of the nation.
The mining summit last week can only be described as surreal. Its dominant coverage of Debswana was more about its corporate social responsibilities and how the nation has benefitted from diamonds than the crisis the industry is facing. It follows the government’s own approach to the issue of refusing to see the writing on the wall, optimistically propelling the narrative of the timeless intrinsic value of natural diamonds.
In stark contrast, this report provides a comprehensive and sobering analysis of the major business risks faced by Debswana. It does so in the hope of dragging the government from its complacency and fatal optimism into the reality that Debswana could be out of business by 2028. It identifies the top 10 threats, evaluates their likelihood and impact, and presents both a risk heat map and a Monte Carlo simulation to quantify the potential financial exposure from these threats over a five-year horizon.
The item then goes on to describe how Debswana should move forward – to boldly enter the global world of mining like many before them have done, going from one commodity to diversified mining. This should have been the main topic of the Future of Mining Summit. Sadly, it was not.
The following table summarises the most critical threats to Debswana, including structural changes in the diamond industry.
Rank
Threat
Probability (%)
1
Synthetic Diamonds
80%
2
De Beers Market Share Decline
75%
3
Botswana Independent Sales Push
70%
4
Global Demand Volatility
65%
5
Resource Depletion & Aging Mines
60%
6
Emerging Diamond Hubs
55%
7
Water and Climate Stress
50%
8
Operational Cost Inflation
50%
9
Reputational/ESG Risk
45%
10
Tech Disruption in Sales
40%
The infographic displays the heat map of Debswana’s top 10 business risks.
Risks such as synthetic diamonds, De Beers’ market share decline, and Botswana’s independent sales strategy fall in the high-impact, high-likelihood quadrant. These represent the most urgent risks to address from both a financial and strategic standpoint.
The heat map visualises each threat in terms of likelihood and potential impact. Top-right quadrant risks are the most urgent and damaging. Another infographic presents the cumulative distribution function (CDF) generated from the Monte Carlo simulation. It illustrates the probability distribution of total risk exposure based on 10,000 simulations of the top 10 threats. The CDF shows that while average exposure is around USD 5.13 billion, there is a 5% probability of losses exceeding USD 7 billion.
A Monte Carlo simulation using 10,000 iterations estimates the potential total financial exposure from these risks. The CDF curve below shows the probability distribution of simulated outcomes. It indicates a high likelihood of multi-billion-dollar cumulative impact if strategic transformation is not pursued. The simulation assumes probabilistic occurrence and variable severity. The key findings were that the mean risk exposure was USD 5.13 billion but at the 95th percentile exposure: USD 7.09 billion while the max exposure: USD 8.5 billion. The table below classifies investor risk exposure based on structural industry changes.
Investor Type
Risk Level
Comment
Sovereign Investors
High
Fiscal exposure to falling diamond revenues and budget stress
Equity Partners (De Beers)
Very High
Core business model being outcompeted and commoditized
International Lenders
High
Future cashflows may not support large new mining debt
Strategic Mineral Investors
Moderate
High upside with early investment in rare earths, lithium, magnesium
Financial Exposure
The Monte Carlo simulation conducted in this report produced a median total risk exposure of USD 5.13 billion for Debswana over a five-year horizon. To understand the gravity of this risk, it must be compared against Debswana’s actual financial performance and national economic context in 2024. In 2024, Debswana’s revenue fell to approximately USD 1.95 billion, down nearly 50% from 2023. This collapse followed sharp drops in global rough diamond demand, worsened by competition from synthetic stones and sluggish retail in key markets like China and the US. The simulated median risk exposure of USD 5.13 billion is 2.6× greater than Debswana’s total revenue in 2024.
This indicates that under plausible threat convergence, losses could overwhelm operating income for multiple years. Debswana will also be crippled by unaffordable loans that it takes out to invest in more production of a product that the market is turning away from. Debswana is not publicly listed, but using EBITDA multiples and discounted cash flow methods, its valuation in 2024 is estimated to have declined to USD 2–4 billion (from USD 4–7 billion pre-crisis).
The simulated median exposure exceeds Debswana’s total enterprise value, suggesting that if compounded risks materialise, they could completely erode shareholder value. As a 50% shareholder, Batswana will be shouldering the debt burden, which is untenable. Botswana’s 2024 GDP was estimated at USD 21.9 billion, with the economy contracting by approximately 3% due to weakness in the diamond sector.
Debswana alone accounted for 80% of Botswana’s export value, 33% of government revenue and 25% of GDP contribution (direct and indirect). The USD 5.13 billion risk exposure represents 23% of national GDP and at least two full years’ worth of government income from diamonds.
Comparative Risk Snapshot
Metric
2024 Value
Exposure ($5.13 B) as %
Debswana Revenue
~$1.95 B
≈ 263%
Debswana Valuation (est.)
~$2–4 B
≈128–256%
Botswana GDP
~$21.9 B
≈ 23%
Fiscal Revenue from Diamonds
~$1.3–1.5 B
≈ 342–395%
The comparison underscores that Debswana’s median downside risk is not a theoretical stress test — it is of a scale large enough to threaten the survival of the company, the fiscal integrity of the Botswana state, and the economic stability of the nation. This reinforces the urgency for diversification and strategic repositioning previously outlined.
Without bold structural transformation, Debswana risks transitioning from a national asset to a systemic liability. Debswana’s traditional business model, built on the long-standing strength of natural diamonds and De Beers’ market control, is under historic pressure. Synthetic diamonds, demand shifts, and global market decentralisation have exposed its vulnerability.
Existential Risk and the Case for Diversification to New Wave Minerals
Debswana must now think and act like a mining company – not just a diamond company. Historically, mining firms begin with a flagship discovery and use those revenues and expertise to diversify into other high-value resources. This model is not new. Global mining giants such as BHP, Rio Tinto, and Anglo American all began with a single commodity – copper, gold, or diamonds – but evolved into diversified mineral powerhouses. Debswana has the geological, technical and institutional capacity to follow the same trajectory. It already has decades of expertise in large-scale open-pit mining, strong governance frameworks, access to skilled labour and local supplier networks and a globally trusted reputation for ethical resource management.
This brief shows that the most critical risks to Debswana are structural and existential, not just cyclical. Diversification to proactively pivot to strategic minerals – rare earths, lithium, and magnesium – is both feasible and necessary because investors face high exposure without diversification. Debswana must spin out its gem diamond production business and diversify mining operations. Such a strategic transformation presents renewed opportunity for the mining industry and hope for the nation.
Key Messages
Debswana must embrace the identity of a diversified mining company, using its past success and global brand to fund its future resilience.
Botswana’s long-term economic sustainability now depends on how boldly and how soon this transition is made.
Source: Botswana Gazette
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