ANGLO American said on Monday that the De Beers Group and the government of the Republic of Botswana have reached an agreement in principle on a new 10-year sales agreement for Debswana’s rough diamond production, through to 2033, and a 25-year extension of the Debswana mining licences, through to 2054.

In a statement, the group said De Beers, its subsidiary, and the government of Botswana will work together to progress and implement the formal new sales agreement and mining licences.

“In the interim, the terms of the most recent sales agreement, which expired on 30 June, will remain in place,” it said.

Botswana, De Beers agree 'in principle' to new diamond sales deal https://t.co/dmLHYPDabr pic.twitter.com/jEMAd9eXEQ
— Reuters (@Reuters) July 1, 2023

The talks have been going on for a while and Botswana President Mokgweetsi Masisi had criticised the 54-year-old partnership, saying his country will not back down on demands for an improved deal and Botswana was prepared to walk away if a favourable deal was not reached.

The group said a new sales agreement between De Beers and the government of Botswana constitutes a related party transaction under the UK Listing Rules, given that both Anglo American and the government of Botswana are shareholders in De Beers, and therefore will be subject to approval by Anglo American’s shareholders in due course.

No value was given for the agreement.

“The transformational new agreements between Botswana and De Beers reflects the aspirations of the people of Botswana, propels both Botswana and De Beers forward, and underpins the future of their Debswana joint venture through long-term investment.

“While the partners finalise the implementation of the formal sales and mining agreements an interim agreement will preserve the terms of the most recent sales agreement which expired on 30 June,” the parties said in a joint statement.

After months of tense negotiations, Botswana and diamond giant, De Beers have reached a new agreement. This was after the Botswana government threatened to cut ties with the company earlier, demanding a bigger stake in the industry. #DStv403 pic.twitter.com/kwAhnbnnmt
— eNCA (@eNCA) July 4, 2023

Debswana operates four diamond mines in Botswana and is a 50:50 joint venture between De Beers and the government of Botswana.

Debswana is jointly owned by the Anglo American unit and the government and has been selling 75% of its output to De Beers, Botswana’s state-owned Okavango Diamond Co (ODC) is taking up the remainder of the stones.

According to De Beers and Botswana’s joint statement, ODC will receive 30% of produce from Debswana from the start of the new contract and this will be scaled up to 50% in the last year of the pact.

“From the start of the new contract period ODC will receive 30% of Debswana production, progressively increasing to 50% by the final year of the contract, ensuring a sustainable transition path for both partners,” De Beers said in the statement.

De Beers will also inject 1 billion pula (R1.4 billion) in a diamond fund that would invest additional value into the Botswana economy. It said the contributions would grow 10 times over the next 10 years.

The parties will also focus on “progressing” long-term capital investment to secure the leading position of Botswana and Debswana and create the potential for tens of thousands of new jobs in the country.

In a press conference to mark the signing, De Beers CEO Al Cook said: “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.”

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