Industry News by Nemesis

Botswana-De Beers Deal Faces Uncertain Future

February 20, 2016

The partnership between Botswana Government and diamond giant De Beers faces an uncertain future with opposition parties in the country making repeated calls that it should be terminated.

 

Leaders of main opposition Umbrella for Democratic Change (UDC) say there is need to reconsider the relationship between the Southern African country and De Beers.

 

When responding to Finance Minister Kenneth Matambo’s budget speech, UDC President Duma Boko said should they assume power, “We would vigorously consider other technical partners for the management of Botswana’s diamond mines other than the current De-Beers arrangement.”

 

Boko said they believe that it is necessary to pursue a fair-minded approach that does not unduly defer to DeBeers even where there is a possibility that there are partners that could assist Botswana generate better revenues and profits from our diamond mines.

 

“This posture is informed by our view that there have been companies, including one in Russia that has been able to perform admirably despite the global economic slowdown and storm against diamonds. This should add hundreds of millions of Pula or even billions each year,” said Boko.

 

UDC Secretary General Ndaba Gaolathe also shared Boko’s sentiments saying the government should “ask itself whether De Beers is the right partner in the mining sector.”

 

Gaolatlhe believes that despite the global worsening situation, there are companies in the mining sector globally that have been improving their revenue in the previous years.

 

“Diamonds are our major revenue earner. I do not believe that this is the time to be saying we hope that the recovery of the global economy will improve our revenue circumstances in the coming years.

 

“What we should be saying is that, given our mining sector are we managing diamonds the way we should be. Do we have the right type of technical partner who is able to assist us to optimise our diamonds revenue,” said Gaolatlhe.

 

It is not the first time the opposition has hinted at ending the long running deal between Botswana and De Beers.

 

In 2014, through their campaign manifesto, the UDC said as a shareholder in Debswana Diamond Company, the government needs to put a more rigorous regime on diamond value management, including process efficiencies and diamond security.

 

The government owns 15 percent of the De Beers group, and Debswana is a 50:50 joint venture between the government and De Beers, for the mining of diamonds in the country.

 

“De Beers is currently undertaking the valuing, aggregation and sales process, a process shrouded in relative secrecy. This means that despite many years of diamond mining, the Botswana government and Botswana citizens remain alien to some of the high value activities within the diamond sector,” reads the party’s 2014 manifesto.

 

But Bruce Cleaver, joint acting CEO of De Beers is quoted as saying that the relationship between De Beers and the Botswana government should not be seen as a “one-size-fits-all approach” for proponents of nationalisation in South Africa.

 

“Cleaver said that deal is unique, as Debswana is by far the biggest contributor to the country’s economy, providing 70 percent of foreign earnings and 50 percent of government revenue and contributing 30 percent to GDP. The solution in one country is not necessarily the solution in another,” he said.

 

Source: Southern Times

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