[HOT AIR] This is quite a story on its face.
Botswana will increase its take of the diamonds De Beers mines there from 25% to 50% in 10 years’ time, part of a deal that extends the company’s relationship with the country while loosening its hold on its output there.
...The agreement in principle was announced over the weekend, but De Beers Chief Executive Al Cook provided details of the pact on Monday. Negotiations over the new deal were watched closely in the diamond industry.
The relationship is deeper than most that involve a miner and a host state. De Beers is the world’s biggest producer of rough diamonds, by value. Botswana, meanwhile, accounts for 70% of De Beers’s worldwide production.
Under the current deal inked in 2011, De Beers gets 75% of production from Debswana, a 50-50 joint venture between the government and De Beers. De Beers sells those rough diamonds to buyers that polish and sell them. Botswana sells its share of production from the pact.
According to the terms of the new deal, Botswana’s share will jump to 30% of production, according to Cook. That will increase to 40% in five years and then 50% after 10, he said in an interview.
The country also extended the company’s mining licenses for another 25 years from their original 2029 expiration date. Now everything’s set to expire in 2054.
At one time, De Beers controlled 80% of the world’s diamond supply, and with diamonds making up 90% of tiny, land-locked Botswana’s exports, De Beers is definitely playing the long game.
In 2012, they began to move some corporate functions out of London to Botswana, and rattled the industry, while energizing what had once been a sleepy backwater capital city — Gaborone. It’s coming along. 
|
