Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Botswana President Mokgweetsi Masisi said his government is prepared to walk away from negotiations with De Beers if he’s not satisfied with the division of revenues from the diamond trade.
Speaking at a ruling party rally near the capital Sunday, Masisi described the ongoing talks with De Beers as “shaking a giant” and added that the country was resolute in its position. Botswana relies on diamonds to generate 90% of its exports.
“These are our diamonds, and we want a larger share for us, but through negotiations,” Masisi said. “If it gets difficult and talks fail, we will have to say, ‘Let’s go our separate ways.’”
De Beers, a unit of Anglo American Plc, and the government have been negotiating since 2018 for a new deal governing the sales of rough diamonds from the world’s second-largest producer. The current agreement expired in September 2020 but was extended several times, initially because of the pandemic.
Last year, the sides agreed to keep the deal going until June. The pact is one of the industry’s most valuable covenants, and the delays are unnerving an ecosystem that includes contractors, sightholders, factories, retailers and financiers.
“Anything that would trouble diamonds would make the market jittery,” Minerals and Energy Minister Lefoko Moagi told Bloomberg on the sidelines of a Jan. 25 briefing. “Markets can start asking, ‘What’s happening here?’”
While declining to provide details, Moagi said most terms had been agreed upon, but “two material issues” remained.
“The challenge is just that they have to be negotiated as a package,” he said.
Bloomberg previously reported that the government is pushing for a bigger piece of the profit split from Debswana, the unit co-owned with De Beers that produces more than 95% of the country’s rough diamonds. The government currently receives about 80% of Debswana’s revenues through taxes, royalties and dividends.
Botswana also wants greater access and clarity concerning the creation of value for the stones after they leave the country and head for international retailers.
(By Mbongeni Mguni)
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