Botswana passes on chance to raise De Beers stake
THE Botswana government has decided to waive its right to increase its shareholding in De Beers, clearing the way for Anglo American to proceed with its plans to raise its stake in the world’s leading diamond miner.
Botswana holds a 15% stake in De Beers and had the option to raise this to 25%. Its decision not to exercise its pre-emptive rights comes amid growing calls for a greater share in mining operations from governments in resource-rich emerging economies.
Anglo will now be able to acquire the 40% stake in De Beers owned by the Oppenheimer family for $5.1bn, raising its total holding to 85%.
The deal cleared the first legislative hurdle last month when SA’s Department of Mineral Resources gave its approval, a key condition for the transaction to proceed.
“It’s pretty much in line with expectations.... When it comes to the government’s role in mining, Botswana has been pretty much market oriented,” Peter Leon, head of Africa mining and energy projects at law firm Webber Wentzel, said yesterday. Botswana is the largest contributor to De Beers’ global diamond production.
“We look forward to building on the excellent relationship we have with Anglo American, both through our ownership of De Beers and through the Debswana joint venture, and to sharing in De Beers’ highly attractive long-term prospects,” Botswana’s Minerals, Energy and Water Resources Minister Ponatshego Kedikilwe said.
Cynthia Carroll, CE of Anglo American, said the partnership with the Botswana government served as a clear indication of the level of commitment towards the long-term prosperity of the world’s leading diamond company.
“We look forward to strengthening this longstanding and proven partnership which provides a close alignment of interests between Anglo American and Botswana and builds upon the 10-year sales agreement,” she said. The deal is expected to be completed by next month.
De Beers reported pretax profits declined to $502m during the first half, compared to $1bn a year ago, due to low demand. Total sales were $3.3bn, down from $3.9bn.