Botswana, De Beers' new deal has no impact on Namibia

July 03, 2023

 The Ministry of Mines and Energy says the new diamond deal signed by the Botswana and De Beers will not affect Namibia in any way.

The deal saw the neighbouring country increase its diamond trading stake to 30% and eventually reach a 50% stake agreement in the final year of the agreement. 

Minister Tom Alweendo said nothing is going to change in terms of market dominance and access, other than the fact that the Botswana government increased its shares.

"I am not privy with the exact details of the new agreement, but what is known is that the deal poses no competition for us, everything remains the same. We shall still be accessing the same markets as before, of which the main ones are the United States, the Middle East," he said. 

Asked whether Namibia will follow suit in bargaining for a better share following its neighbour's success, the Minister said, "In every renegotiation, we would have learned some lessons, hence we use such to guide us in reaching new agreements. Every deal we look at what happened and how the processes were, and thus conforms to new terms."

Alweendo underscored the importance of the diamond industry serving as an economic backbone, with total exports from the mining industry contributing more than 50%. In 2022, of the total taxes from the mining industry, 55% came from the diamond sector.

According to the Namibia Statistics Agency's latest figures, diamonds made up 21.7% of total exports worth N$1.6 billion during the month of April 2023, yielding a trade surplus of N$1.4 billion.

"It is that important, requiring us to manage the sector with due care. Like with other minerals, we need to continue to ask ourselves the question of whether our diamonds can contribute more to our economy. What more can we get from our diamonds; how can the diamond sector contribute more to our local economic activities," he said.

The Namibian government and De Beers are shareholders through a 50-50 shareholding in Namdeb and together are governed by a Sales and Marketing Agreement, that is expiring in May 2026, and a new agreement will be negotiated. 

One of the key features of the current agreement is that 15% of the total diamond production is allocated to Namdia and 35% is allocated to the local cutting and polishing industry.

 Namdia was created in 2016 in an effort to market and sell the diamonds on behalf of the government for better returns, a role that was previously handled by De Beers.

Meanwhile, the agreement signed between the Botswana government and De Beers, allows the country to have an increased share of 30% of diamond production for sale through the state-owned Okavango Diamond Company.

This comes hot on the heels of President Mokgweetsi Masisi who has been increasingly vocal in his criticism of the 54-year-old agreement and threatened to withdraw if it didn't provide more benefits to his country, including a larger allocation of the gems produced there.

Currently, the Okavango Diamond Company receives 25% of Debswana's production.

The new agreement includes a provision for a 10-year period to sell the rough diamonds produced by Debswana, a joint venture equally owned by the government and De Beers. It also extends the mining licenses for 25 years. 

Negotiations between De Beers, a unit of Anglo-American Plc, and Botswana's government began in 2018 after the previous agreement expired in 2020.

The negotiations were extended several times due to disagreements over the supply Botswana should receive and tensions concerning the role of Belgian gem trader HB Antwerp, which has established a close relationship with the government.

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Last modified on Tuesday, 04 July 2023 19:04

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