Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Botswana govt says no guarantee on De Beers sales deal by end-2020

Published 25/08/2020, 17:39
© Reuters. Diamonds are displayed during a visit to the De Beers Global Sightholder Sales (GSS) in the capital Gaborone in Botswana
AAL
-

By Brian Benza

GABORONE, Botswana (Reuters) - The Botswana government said there was no guarantee that it would be able to renew a new 10-year sales agreement with De Beers before the end of December, when the current one expires, as the coronavirus pandemic has delayed negotiations.

"The ideal situation would be to end the talks by December but there are no guarantees that will happen," said Mmetla Masire, Permanent Secretary in the Ministry of Minerals told Reuters in an interview late on Monday.

The deal is necessary for the Debswana Mining Company, jointly held by the world's biggest producer De Beers and the Botswana government, as it provides the country with around two-thirds of its foreign exchange and makes up a fifth of its GDP.

For De Beers, a new deal would mean another 10 years of clarity on the terms of its revenue stream from a country from where it sources 70% of its diamonds and 90% of its sales.

The wealth from diamond mining has helped transform the country from primarily a agri-based economy to one of Africa's richest countries.

A delay would set back President Mokgweetsi Masisi's efforts to boost a fledgling diamond polishing and cutting industry and create jobs in a country of 2.2 million with high unemployment.

Masire said the government had resumed talks for a new deal, but travel restrictions have kept the progress slow.

In 2011, De Beers agreed a deal to transfer its global sightholder sales, which accounts for 90% of its total diamond sales, from London to Gaborone, creating thousands of jobs and investment in the southern African country.

Botswana's government would want a higher allocation of diamonds produced by Debswana for sale from the current 15% agreed in 2011, or get a larger share of rough stones, said Avi Krawitz, an analyst from Israel-based diamond information provider Rapaport.

"This will be a sticking point for De Beers," he said.

Masire declined to divulge specific terms being negotiated in the talks.

© Reuters. Diamonds are displayed during a visit to the De Beers Global Sightholder Sales (GSS) in the capital Gaborone in Botswana

De Beers, a subsidiary of Anglo American (LON:AAL) Plc, is an important business division for its parent contributing a fifth of its revenue. De Beers has not responded to an emailed request for comment sent on Monday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.