Botswana has reached its light bulb moment. It wants more from its diamond resource. Botswana is the largest diamond producer in Africa and the second-largest global producer, next to Russia. It is home to the Jwaneng mine, the world’s richest diamond field by value, producing high-quality diamonds at an annual average in excess of 12 million carats.
In 1969, the country entered an agreement with De Beers that eventually led to the founding of Debswana. The country explores its diamond resource through Debswana. De Beers is a mining consortium and subsidiary of London-based Anglo American Plc.
Both Botswana and De Beers have an equal 50% stake in the company, a deal that would later allow the country to harness its rich mineral wealth. More so, Botswana holds a 15% stake in De Beers, while Anglo American Plc maintains the remaining 85%. The Southern African country supplies 70% of De Beers’ rough diamonds and De Beers controls all four of Botswana’s mines.
Under the current contract, Debswana sells 75% or three-quarters of its rough diamond output to De Beers, while the remaining 25% goes to the state-owned Okavango Diamond Company (ODC) through which the government sells rough diamonds independently to the open market. Last year, De Beers sold rough diamonds worth $4.3 billion, a 13% increase over the 2021 sales. And ODC’s sales jumped to $1.2 billion, up from $963 million in 2021.
It took the country a long time to fully explore selling its gems directly to customers outside the De Beers system. It has now realised how much it could make from selling its diamond and is demanding an increase in its diamond sales share as both parties hold talks on sales licence renewal. Although the country has not specified how many additional shares they want in the existing agreement, De Beer is willing to negotiate as the government has threatened to end the more than five-decade-old relationship.
“Besides the fact that the diamonds are ours, it doesn’t make sense for us to continue to relegate ourselves to participating in the rough space only,” said President Mokgweetsi Masisi. “So, it’s only logical that we want more and we are going to get more. But through negotiation.”
In 2018, Botswana’s natural gemstones and industrial diamond production amounted to 24.5 million carats. Last year, production increased by 11% to 5.8 million carats, primarily driven by strong plant performance, particularly at the world’s richest diamond mine, the Jwaneng mine. Sales of rough diamonds by Debswana jumped 54% in the first six months of 2022. By the end of 2022, diamond sales from the joint venture stood at $4.588 billion compared to $3.466 billion in 2021.
Diamonds prospects were discovered in 1938 in Bechuanaland (Botswana’s official name during the British colonial administration that ended in 1965), following exploration by a joint venture between Anglo American Plc and De Beers that began in 1932. Diamonds were later discovered in commercial quantity in 1967, by the De Beers Group. De Beers is a diamond mining, diamond exploitation, diamond retail, diamond trading and industrial diamond manufacturing company owned by British multinational, Anglo American plc.