Gaborone — Botswana President Mokgweetsi Masisi has again criticized a 54-year-old partnership with world-leading diamond producer De Beers, saying his country will not back down on demands for an improved deal.
Under the current arrangement, due to expire next month, Botswana gets 25% of rough diamonds mined under its partnership with De Beers, and the company gets the rest. Negotiations on a renewal of the pact, in which Botswana is seeking a higher stake of the profits, are underway.
The stones are mined by Debswana Diamond Company, in which the two partners own equal shares.
Botswana provides De Beers with 70% of its rough diamonds.
Not ‘until death do us part’
Since February, Masisi has ramped up the pressure on the diamond giant. Speaking in Mmadinare, northeast of the capital, Gaborone, on Thursday, he did not mince words.
“This is not [about] ‘until death do us part’ or a permanent agreement,” Masisi said, speaking in the local vernacular, Setswana.
He hinted that the negotiations might stall.
“It is either we accept the situation as it is and continue getting leftovers, or alternatively we dig in and, no matter how tough it is, demand what is ours, even if we lose through litigation,” Masisi said.
No comment could be obtained from De Beers. The company has previously indicated it was confident a deal would be fleshed out, while acknowledging some complexities.
With Botswana due to hold its general election next year, Masisi said he would be willing to lose over the sensitive issue.
“I am not scared,” he said. “Yes, we are politicians and always lobby for votes, but if it means losing as a result of this issue, let it be.”
The current negotiations began in 2018 and were to end in 2021 but were extended until June 30, 2023, because of the pandemic.
Masisi said trade in all rough diamonds mined in Botswana could net up to $15 billion a year, but under the De Beers deal, the country gets “only $7 billion, or $8 billion if we are fortunate.”
Also, he noted, the current agreement restricts Botswana to trading only in rough diamonds. He said the country wants to be involved in the diamond value chain, which includes not just mining but also sorting, cutting, polishing, jewelry creation and sales.
Masisi said involvement in the value chain could earn Botswana nearly $100 billion, which is why it wants a better deal with De Beers.
The president said he finds it strange that if there is a deadlock in negotiations, the matter is referred to courts in England for arbitration.
“People cannot do what they want with our diamonds, leaving us in poverty, yet they get rich,” he said. “The $7 billion that we get … yet we can get close to $100 million. No, no.”
Masisi said that if Botswana reached a favorable deal with De Beers, poverty in the country could be eradicated in the blink of an eye.
“We have been shortchanged with our resources through these agreements, but now we can read, and our eyes are open,” he said.
Belgium-based diamond expert Hans Merket said Botswana’s continued threats to pull out of the De Beers deal had left the industry skittish.
“It is hard to tell if the long-standing deal between Botswana and De Beers is in jeopardy,” he said. “As this continues to drag on and as we continue to hear strong statements from the Botswana side, many people in the diamond industry are clearly getting nervous.
“But the general expectation is that this is still part of the negotiating tactics to get a better deal rather than to risk breaking it. Common sense reasoning is that both De Beers and Botswana need each other to divorce.”
Merket said that because of Botswana’s prominent role in the sector, the value chain can be affected by protracted talks.
“Botswana is the largest diamond-producing country by value, and Debswana accounts for over 90% of that production. So we are talking about roughly 25% of the total world diamond production value,” he said.
“It is clear that any troubles with that supply would be felt globally, all the more given that diamond production from Russia, the other big producer country, is increasingly cornered following Western sanctions in the light of the war in Ukraine,” he said.
Botswana is second only to Russia in global diamond production. However, buyers have been shunning stones mined in Russia following Moscow’s 2022 invasion of Ukraine.