Botswana pushes De Beers to the brink in ‘new marriage’ talks

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By Mpho Tebele

Gaborone - Botswana is reportedly pushing for a larger stake in its new marriage with diamond giant De Beers Diamond Company ahead of the negotiations for the next sales agreement set for 2020.

Recently, local media reports indicated that Botswana wants nothing less than “having a greater say in the determination of prices within the rough diamond sector, as a priority for the next deal with De Beers”.

This was also confirmed by President Mokgweetsi Masisi when he delivered a keynote address at a diamond conference held in Gaborone this week. Masisi used the event to pay tribute to  Government of Botswana’s team that negotiated the historic sales agreement of 2011 which was ably led by Eric Molale, who is now the Minister of Mineral Resources, Green Technology and Energy Security.

Masisi said the team worked hard to set the stage for the transformation of the diamond industry.

“As I speak, another team has been assembled to kick-start the negotiations for the next sales agreement, which is set to continue when the current agreement ends in 2020.

Masisi said, “Through our partnership with De Beers, there has been over the years, increased participation in the diamond pipeline from prospecting through to cutting and polishing.”

While Masisi also noted that, “Our historic 2011 sales agreement was instrumental in achieving these milestones,” he expressed concern that “We, however, need to move further up the pipeline to jewellery manufacturing and retail.”

According to Masisi, “Participation at these upmarket levels of the pipeline, however small, will go a long way in promoting the development of Gaborone as a ‘Diamond City’, and Botswana as the number one diamond destination.”

Masisi informed a delegation of more than 500 guests that the Botswana Government was fully committed to being part of the journey and solution to a successful diamond sector and to the ongoing development of Social Capital.

“I would like to highlight the fact that there is still more that we can do. As Botswana, we recognize this and through our National Vision 2036, we are committed to the ideals of bringing Botswana out of the middle-income trap and transforming her into a high-income country. We, therefore, are prepared to introspect and to ponder on strategies we can adopt, in our bid to concretize the realization of this goal,” he said.

 He said beneficiation remains a key objective of Botswana’s economic diversification drive in the diamond sector.

 “It is also one of my Government’s key priorities because it has the potential to create sustainable jobs, particularly for the Youth. All of you indeed have and continue to play a significant role in supporting the positive economic and social impact of diamonds across producer countries,” said Masisi.

Botswana is the world’s biggest diamond producer after Russia, and most of its gems are mined by Debswana, a 50-50 joint venture between the government and De Beers. Anglo American owns 85% of De Beers, with Botswana’s government holding the balance.

De Beers sells diamonds at invitation-only sights held 10 times a year at its offices in Botswana. The company sets the prices and its handpicked customers, known as sightholders, are not able to negotiate.

Masisi said collaboration is enormously vital in any relationship.

“Even more so, in today’s world where business is volatile and markets are unpredictable. We must, therefore, for the benefit our citizens continue to work closely together and be global leaders in enhancing Social Capital. We should thus look forward to a future that has exploration, mining, trading, cutting and polishing entities, jewellery manufacturers, retailers, industry experts and media professionals,” said Masisi.

Reports indicate that while the government of Botswana has its own valuators, De Beers nearly singlehandedly controls the value of diamonds emerging from Debswana, using the price book, which in turn determines government’s mineral revenues.

The negotiation between Botswana and De Beers has long been controversial and it keeps on being a topical issue in local and international discourse.

Recently legislators who are members of Parliament’s Public Accounts Committee failed in their efforts to have minerals permanent secretary, Cornelius Dekop to open up about what really transpires during negotiations.

“When you talk to people in a negotiation, there are things you can say and things you cannot. You do not want to negotiate in bad faith. The price book is one of the issues in the talks; they have been controlling that on their own. We want to look at charges on sight holders, beneficiation and others besides the price book,” he said.

He added that “The people negotiating for us have access to the price book, but it’s not enough.”

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