- Tsaone Segaetsho
Local mining experts are already observing that President Duma Boko faces a substantial task in mending relations with Botswana’s diamond partner, De Beers, a step that could help steer Botswana towards a stable economy suited to middle-income status. Elections last week saw the ruling BDP, after 58 years in power, lose its grip to a coalition of convenience and compromise led by Boko’s Umbrella for Democratic Change (UDC).
Renowned diamond expert Avi Krawitz spoke about the stakes for the diamond market and the importance of fostering a mutually beneficial relationship between the Botswana government under Boko and De Beers or the diamond industry as a whole. Botswana is the second-largest producer of rough diamonds, only after Russia, accounting for 23% of global output by volume and 26% by value.
“The stakes were therefore high for Botswana in negotiating the new agreement (with Masisi over the sales agreement). But there was a lot riding on it for De Beers too. The company also has its limits and needs to extract a certain value from the relationship.
“Rumours have swirled since the election result that De Beers was losing patience with the president and was rethinking the deal. Masisi was still holding out for more,” said Krawitz.
Krawitz, who noted that Boko had sensed tension between De Beers and his predecessor’s government, aims to conclude the De Beers-Botswana Government pact as soon as possible. “That is an encouraging sign for the diamond industry. Finalising this drawn-out saga would eliminate one major point of uncertainty engulfing the trade, among the many it currently faces,” Krawitz said.
Krawitz stopped short of saying Masisi was asking for too much, adding that De Beers had made significant compromises. He highlighted that a key outcome of the deal for Botswana would be the creation of the Diamonds for Development Fund, aimed at identifying sectors beyond the diamond value chain to support the government’s national development plan.
He further noted that finalising the mining lease would pave the way for De Beers shareholders to make crucial development and investment decisions, notably the expansion to underground operations at the Jwaneng Mine.
James Campbell, Managing Director of Botswana Diamond PLC, a diamond exploration entity, told this publication that Boko repairing relations with De Beers is “an excellent development.”
“The way the deal was developing between De Beers and the Government of Botswana provided no downside protection to Botswana in a declining market and only potential upside in a growing market. In my view, this was not a good long-term decision for Botswana. With the current market decline, everyone is familiar with the significant drop in diamond income for the state, which perhaps contributed to the change in government,” said Campbell.
Mining expert Dr Leon Daniels, however, refrained from commenting further on the diamond mining lease talks and Boko’s efforts to repair relations with De Beers. Instead, he addressed the new government’s potential shift away from the BDP-Neil Oppenheimer legacy of favouring large-scale over small-scale diamond mining.
Daniels said that Boko needs to review the Mines and Minerals Act, particularly Section 52, which deliberately excludes diamond mining by small miners. He argued that the law should allow all miners, large and small, to obtain a diamond licence and should also provide for a less burdensome mining permit option.
