Botswana has secured a landmark 10-year diamond sales agreement with De Beers, concluding seven years of negotiations and strengthening its stake in diamond revenues.
The deal enhances the government’s share in diamond sales through Debswana, its joint venture with De Beers, a subsidiary of Anglo American. Botswana, the world’s top diamond producer by value and second-largest by volume after Russia, expects the agreement to bolster its economy.
Diamonds are crucial to Botswana’s economy, accounting for about 80% of exports and a quarter of its GDP, according to the International Monetary Fund. However, a downturn in diamond prices and demand has severely impacted the nation’s economy, influencing last year’s national elections.
The ruling party, in power for 58 years since independence from Britain, was unseated in a surprising electoral shift, largely driven by economic challenges tied to the diamond industry.
Under the new 10-year deal, Botswana will receive 30% of Debswana’s sales for the first five years, increasing to 40% in the second half of the agreement. A potential five-year extension could raise the government’s share to 50%. In return, De Beers secured a 25-year extension of its mining licenses, pushing their expiration from 2029 to 2054.
President Duma Boko, who took office following the elections, hailed the agreement as a step toward a more prosperous future for Botswana.
Botswana has been the site of several significant diamond discoveries over the past decade. In 2023, a Canadian mining company, Lucara, unearthed a 2,492-carat diamond, the second-largest ever found and the largest in over a century. In 2021, Debswana discovered a 1,098-carat diamond, its largest find to date.
Despite these discoveries, Botswana’s diamond industry has faced economic difficulties. Debswana reported total sales of $1.53 billion in the first nine months of 2024, a more than 50% decline from $3.19 billion during the same period in 2023, according to Botswana’s central bank.
The World Bank has warned that Botswana’s heavy reliance on diamond exports makes its economy vulnerable to market fluctuations, stressing the need for diversification to ensure long-term stability.