Botswana intends to increase its ownership stake in De Beers, the world’s leading diamond producer by value. This move aligns with the nation’s strategy to enhance its economic stability and benefit from its rich diamond resources. President Mokgweetsi Masisi confirmed ongoing discussions aimed at acquiring more shares in De Beers during a political rally in the north of Gaborone. This statement follows reports about Anglo American’s plans to either sell or spin off its 85% stake in the diamond company. Anglo American took control of De Beers in 2011 after purchasing a significant stake from the Oppenheimer family for $5.1 billion.
Botswana’s government currently owns 15% of De Beers and has played a crucial role in the company’s operations, providing 70% of De Beers’ annual rough diamond output. Increasing shareholding is seen as a strategic move to assert more influence and secure a greater share of the revenues from diamond sales.
In preparation for the separation from Anglo American, De Beers announced plans to phase out its production of lab-grown diamonds, marking the end of a six-year period during which De Beers experimented with selling synthetic diamond jewelry under its Lightbox brand, initiated in 2018.
The company’s focus now shifts to enhancing its core operations and profitability. De Beers has set a target of reaching annual core profits of $1.5 billion by 2028. This goal follows a year of modest earnings, with profits totaling just $72 million, though historically, earnings have fluctuated between $500 million and $1.5 billion, reflecting the cyclical nature of the diamond market.
De Beers has also committed significant investment to extend the lifespan of its flagship Jwaneng mine in Botswana. In January, the company pledged $1 billion to transition the mine from open-pit to underground operations. This project is crucial for prolonging the mine’s productivity and securing De Beers’ supply of high-value diamonds, which are central to both the company’s success and Botswana’s economic well-being.
The local joint venture between the government and De Beers, known as Debswana, is instrumental in the country’s economy, contributing to a fifth of Botswana’s GDP. This partnership is not only significant economically but also symbolizes the deep ties between the nation and the diamond industry. With 124 years of operating independently before Anglo American’s involvement, De Beers is positioned to reestablish itself as a leading entity in the diamond industry, with Botswana playing a pivotal role in its future.
