Africa-Press – Botswana. Botswanan President Mokgweetsi Masisi was at his bellicose best last weekend, telling a rally that the government may end a more than 50-year partnership with De Beers that’s seen diamonds become the lifeblood of his nation’s economy.
Negotiations on a new deal with the world’s biggest diamond company, which jointly owns the Debswana venture with Botswana, have dragged on for years.
With the terms of the current agreement being mostly secret, it’s unclear what Masisi wants although he has demanded greater benefit and may push for more diamonds for the state gem trader. The government is currently said to get 80% of revenue from the joint venture.
Masisi has increased the pressure on the Anglo American subsidiary by cosying up to HB Antwerp, a Belgian company that pays Botswana-mine owner Lucara Diamonds the value of some of its bigger stones as polished rather than rough gems.
“There is enormous scalable potential for the profit-sharing model that Botswana and HB Antwerp are pioneering,” Masisi said in September. “The way that extractive industries interact with African governments has to fundamentally change.”
A divorce might not be that easy, though.
Debswana owns the world’s biggest diamond mine, Jwaneng, and three others. Jwaneng is undergoing a $1.2 billion expansion and a similar one is planned at Orapa. To extend operations for decades, an underground shaft will need to be dug at Jwaneng at a cost of $5 billion or more.
There aren’t many mining companies that can fund capital projects at that scale. And, while Debswana is essential to De Beers, it’s just one division at Anglo, which can deploy its capital into a range of commodities and countries.
For the sake of De Beers, Botswana and the global diamond industry, a compromise may be in everyone’s interest.
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