Botswana, diamond firm sign new contract
Continue work in lucrative deal despite tensions
JOHANNESBURG — A Botswana government official and the CEO of De Beers, an international diamond conglomerate, signed interim agreements Saturday to continue a lucrative, decadeslong diamond mining partnership that had appeared to be breaking down in recent months.
Only minutes before a midnight deadline Friday, the parties announced that after years of negotiations, they had agreed in principle on a deal to renew a partnership that supplies De Beers with most of its diamonds and Botswana’s government with the largest chunk of its revenue.
The details of the deal were still being worked out, officials with the government and De Beers said. But it addresses one of the most significant gripes of the Botswana government, regarding the share of diamonds it receives in its joint mining venture with De Beers. Under the old agreement, Botswana received 25 percent of the rough stones extracted, while De Beers took the rest. Now, Botswana will immediately get a 30 percent share, and that will rise to 50 percent within a decade, De Beers and government officials said.
De Beers said in a statement that it had agreed to invest as much as $825 million over the next 10 years to help develop the Botswana economy. The agreement also includes establishing an academy in Botswana that will train locals in skills in the diamond trade, government officials said.
The government of Botswana, the world’s second-largest diamond producer, hailed the agreements as a sweeping victory for the country of 2.4 million people, saying they would allow the southern African nation to achieve its long-term development goals.
Despite the government’s demands for a fairer deal, few would dispute that diamonds have already transformed Botswana in ways that many African nations can only envy.
In 1966, the year that De Beers first discovered diamonds in Botswana and that the country gained independence from Britain, Botswana was among the poorest countries in the world, with only about 7 1/2 miles of paved roads. Now, it is considered an upper-middle-income country with robust infrastructure and the sixth-highest economic output per person, according to the World Bank.
The partnership with De Beers produced about $2.8 billion in revenue for Botswana last year.
But the World Bank also ranks Botswana as one of the most unequal countries on the planet, and Botswana citizens and government officials have said they deserve to earn more from the diamonds that are buried in their soil in order to address the lingering social ills.