20 Jul 2023

Government is satisfied with the outcome of its negotiations with the De Beers Group on the new diamond sales agreement, Minister of Minerals and Energy, Mr Lefoko Moagi has said.

Delivering a statement in Parliament recently, Mr Moagi said the outcome reflected the true partnership that existed between the two entities, and that both parties were committed to participating in Botswana’s economic transformation agenda.

He said Botswana and the De Beers Group signed an interim agreement extending the sales agreement by three months up to September 30, 2023 while they finalised the legal agreements of the formal sales and mining agreements. The interim agreement, he said, would preserve the terms of the most recent sales agreement which expired on June 30, 2023.

He said the two parties reached an agreement in principle on a new 10-year sales agreement for Debswana’s rough diamond production through to 2033, and a new 25-year Debswana mining licenses through to 2054.
The statement of principles, the minister said, contained the following salient features; the Diamonds for Development Fund- where De Beers would make an initial contribution of P1 billion and an annual base contribution of 5 per cent of their share of the distribution until a total contribution of P10 billion over the next 10 years has been made.
With additional third party funding, he said the potential number of jobs created could be 100 000, explaining that ‘not only will the fund immediately inject financing into Botswana enterprises, it will also provide investments and security for a long-term economic life beyond diamonds.’
“De Beers will also approach ‘Friends of Botswana’ to contribute to the fund. The fund will be used to prepare mining communities in Jwaneng and Letlhakane for life beyond mining by developing sectors with comparative advantage in mining areas,” he added.
Furthermore, Mr Moagi said the fund would complement government’s economic diversification drive at the national level to transition to a knowledge-based and export-led economy by growing selected high potential sectors.

The targeted sectors, he said, were smart agriculture, tourism, water and energy sectors. He added that the fund would also be used to  develop an investor ecosystem that would source funds for businesses. The minister said diverse businesses would be identified with investment potential, and that they would be prepared to be investment ready. He added that it would match investors to business and foster a conducive investment ecosystem, but he said there would be no role in investment terms between the investor and business.

“In terms of investing in businesses, providing gap funding, it would pool capital from De Beers and other donor sources, it will provide zero-equity financing, research and development grants, feasibility study funding, first-loss capital gap funding to businesses for returns to be re-invested in businesses,” said the minister.

The other one, he said, would be on international exploration collaboration, where De Beers would give Botswana the option to partner in diamond exploration activities in eight designated areas of mutual interest in Botswana, Brazil and Canada, through a non-exclusive cooperation agreement.

“De Beers will also give Botswana first right of refusal in other areas where they will be exploring. Exploration offers training of Batswana and exposure to different jurisdictions. Establishment of a diamond lab using De Beers world leading capabilities will be offered. The lab could be commercialised to serve the mining and exploration industry,” he added.

In terms of expansion economies and expansionary capital expenditure, the minister said De Beers had agreed to increase their contribution of capital expenditure to all expansion projects such as Orapa Cut 3, Jwaneng Cut 9 and Jwaneng underground project.
In terms of the mining license and length of new sales agreement, he said Botswana shall grant Debswana a new mining license for a period of 25 years from August 1, 2029 and a 10 year sales agreement up to 2033.

In terms of the Okavango Diamond Company (ODC) purchase entitlement, Mr Moagi said immediately after the signing of the new agreements, the ODC purchases entitlement increased to 30 per cent and would then gradually increase to 50 per cent in the next 10 years.

“The objective is to ensure that the market is stabilised, capacity is built and more value is sourced,” he said.

In terms of beneficiation initiatives, the minister said in order to complement the government’s beneficiation strategy, De Beers would set-up a Botswana jewellery manufacturing facility in partnership with any other partner that it would select. Additionally, he said there would be an establishment of a diamond vocational training institute and a diamond entrepreneurship programme.

Rough diamonds required for beneficiation, he said would  be supplied from the relevant beneficiation supply up to a limit to be agreed between the two parties.

Further, he said De Beers would  also establish, at its cost, a De Beers Group institute of diamonds grading and inscription laboratory in Botswana.

He also noted that government would take steps, including in respect of the training levy, to facilitate a conducive environment for the initiatives.

In terms of knowledge management and talent development for these programmes, Mr Moagi said there would be a talent development programme administered by a talent council made up of representatives from the two parties to implement a talent programme where a total of 350 Batswana would immediately participate.

“And this spans various diverse courses that will be selected by the needs of the government of Botswana. It will include international graduate development programme, leaders accelerator programme, government leadership programme, sponsoring students and facilitating them to PhD and MSc for collaborative research projects, local internship programmes, women partnership and Stanford partnership,” he added. Ends