JOHANNESBURG (miningweekly.com) – The De Beers Group, which concluded in-principle diamond sales and mining agreements with the government of Botswana at the weekend, has committed a billion pula (R1.4-billion) upfront to fund the development of diversification within Botswana.

“I've just returned from Botswana and I'm really delighted that we've reached agreement in principle with the government of Botswana,” De Beers Group CFO Sarah Kuijlaars told Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.)

The new mining licence in Botswana will run to 2054, an additional 25 years, and the sales agreement for another ten years, to 2033. Debswana, a 50:50 joint venture between De Beers and the Botswana government, operates four diamond mines in Botswana, and joint work to progress and implement the formal new sales agreement and mining licences will now take place. In the interim, the terms of the most recent sales agreement, which expired on Friday, will remain in place.

“I think it's worth remembering that these are quite complex agreements, covering the midstream, but also the upstream, so Debswana, and an extension of the mining licence in Botswana.

“A couple of highlights to pull out. We've announced the initiation of a Diamonds for Development Fund, and we've committed to put a billion pula upfront.

“This fund is for the development of diversification within Botswana, looking at adjacencies beyond diamonds, and potentially into agriculture, climate change, solar development, and tourism,” said Kuijlaars.

The development fund will be managed separately from De Beers for the benefit of the Botswanan people. A release from the Botswana government states that the agreements reflect the aspirations of the people of Botswana. 

“It's the acknowledgement of the desire by Botswana to get involved across the value chain within the diamond industry,” Kuijlaars said of the fund, which involves an increased role with and through the Okavango Diamond Company, or ODC, a rough diamond marketing company that is wholly owned by the Botswana government.

“We offer our global customer base open access to scale supply of the full range of rough diamonds sourced from Botswana and increased opportunity in cutting and polishing and increased opportunity in jewellery manufacturing, so overall, a real opportunity to create more jobs for Botswanan people in Botswana,” added Kuijlaars.

“These have been really complex negotiations over many years. But we have agreed in principle and you'll have seen that representatives of the government of Botswana have come out publicly as well.”  

The agreements will proceed to the terms arrangement, and then to the long-form agreement, which ultimately will have to go to the shareholders of Anglo American, as this is a related-party agreement between the group and the government of Botswana.

Mining Weekly: Would you describe the talks as being convivial?

Kuijlaars: Any negotiation can get tough at some point, but I think what's really important is we're firmly aligned, and I think it's great to see many photos of the firm handshake of the Minister and Al Cook on Saturday morning, demonstrating our commitment for the future.

Has mining been held up while you people have been talking?

No, mining hasn't been held up, but I think we've got to acknowledge there was an expectation around the industry. It is an ecosystem, a global ecosystem, so I think there was some uncertainty, and that's why it's so important that we have demonstrated our partnership, demonstrated alignment, which gives some real clarity for the whole industry going forward.

UK LISTING RULES

A new sales agreement constitutes a related party transaction under the UK listing rules, given that both Anglo and Botswana are shareholders in De Beers, and therefore will be subject to approval by Anglo’s shareholders in due course.

De Beers global approach to diamond mining spans two continents and four countries. In South Africa is the large, modern, long-life and climate conforming Venetia, with the joint venture marine diamond prospecting and recovery company Debmarine in Namibia, Gahcho Kué in Canada, and an exploration contract in Angola.

The 135-year-old De Beers last month opened its new Sightholder Sales South Africa, a diamond processing operation, close to Johannesburg International Airport.