* Both signed Statement of Principles and signed Heads of Terms * Drafting of final Agreements at completion stage
Negotiations between the Botswana government and its major mining partner, De Beers, regarding the potential increase of Botswana's 15 percent stake in De Beers, or the possible exercise of pre-emption rights to prevent the sale of shares, are reportedly nearing completion.
These discussions, which began in June last year, also encompass the Sales Agreement for Debswana's rough diamonds and the extension of mining licenses.
The outcome of these negotiations is crucial in determining whether Anglo American, the UK-based parent company of De Beers, can sell its De Beers shares to another entity. Although there have been rumours that Anglo is currently selling, these claims have been denied by industry insiders, as both parties have signed a Statement of Principles and later, a Heads of Terms agreement.
Anglo American had previously indicated plans to sell or demerge significant parts of its operations, including De Beers and its platinum division, as part of a strategy to focus on areas such as copper, premium iron ore, and crop nutrients.
Botswana raised concerns about this, drawing her partner to the fact that in accordance with the original agreement she has the first right of refusal, they cannot sell without having informed her to consider its interests, particularly in light of the rejection of a £34 billion takeover bid from Australian rival BHP, which could have left Botswana dealing with a hostile investor.
The Botswana government and De Beers have yet to finalise the renewal of their 10-year partnership agreement, which includes the planned US$6 billion expansion of the Jwaneng mine, a key asset in De Beers' portfolio.
Earlier this year, President Dr Mokgweetsi Masisi attended the 2024 JCK Las Vegas show, where he advocated for Botswana’s position, as the country faced potential challenges with Anglo being a target of takeover bids. The
government holds 15 percent of De Beers' shares and 50 percent of its Botswana-based mining operations through Debswana.
In an interview with the Botswana Guardian, Permanent Secretary in the Ministry Of Minerals and Energy, Khowe Pelalelo explained the position as follows:
On the 30 June 2023, the Government of the Republic of Botswana and De Beers Group signed Statement of Principles and subsequently signed Heads of Terms on the 30th September 2023 articulating a comprehensive framework for the new 10-year Sales Agreement for Debswana’s rough diamond production through to 2033, and the 25-year extension of the Debswana mining licenses through to 2054.
The Heads of Terms provide further detail and clarity to the commercial and operational aspects towards concluding long form operational Agreements between the two partners.
The parties are positive that the long form operational Agreements are at a conclusive end. Notably, the Government is also exploring the possibility of increasing its stake in De Beers in light of the possibility of Anglo’s strategic move to sell DeBeers. Botswana is a 15 percent shareholder in De Beers and intends on possibly increasing its stake by exercising its pre-emption rights under the current agreement and receiving a first right to purchase or not the shares to be sold.
Diamond industry experts, both locally and internationally, have confirmed that the negotiations are in their final stages, with those involved currently focused on drafting the agreement. They emphasise the undeniable fact that Botswana contributes 70 percent of De Beers' value.
Botswana's position is clear: while De Beers cannot exist without Botswana, the country can thrive without De Beers. Should Anglo attempt to sell before reaching an agreement, they would essentially be selling "just a shell." Industry players argue that it would be wise for Anglo to wait before selling, as doing so now could result in Botswana claiming 70 percent of De Beers' value, leaving only 30 percent to be sold, which would not be feasible.
One industry insider mentioned that Anglo plans to sell its diamond interests by the end of next year. However, since De Beers is not a publicly listed company—only Anglo is—any potential buyer aiming for control of De Beers would likely lose interest if much of its value has already been sold off.
Experts also stress that De Beers should not be sold while negotiations with Botswana are ongoing, as any buyer would face uncertainty without clarity on the Botswana agreement, which is a key factor. They highlight that purchasing De Beers means buying into long-term commitments.
The situation is highly complex, and selling in pieces would not be effective. Botswana itself has been advised not to increase its shareholding beyond 25 percent, as putting too many resources into one venture could be risky.
This week, the UK-based financial website, ‘This is Money’ published an article titled "Anglo American Braced for Fresh Takeover Turmoil: De Beers Owner Left Vulnerable as Shares Slide."
The article highlights that when Duncan Wanblad initiated the largest restructuring in Anglo American’s 107-year history to fend off unwanted takeover attempts from Australian mining giant BHP, he faced a significant challenge.
In the four months since the company’s CEO announced plans to sell Anglo’s nickel, coal, De Beers diamond, and platinum businesses within two years, the situation has only become more difficult.
Wanblad’s efforts to refocus the FTSE 100-listed company on its prized copper assets and stabilise its balance sheet have been hindered by falling commodity prices, a steep drop in Anglo’s share value, and a fire at its flagship coal mine in Queensland.
As a result, Anglo American is now more vulnerable to a takeover than ever, potentially at a lower price, having previously rejected a £39 billion offer from BHP. This risk is about to come into sharp focus for Anglo’s shareholders.
Under Takeover Panel rules, BHP, as the previously rejected bidder, must wait six months before making another offer. Since BHP chose to walk away rather than pursue a hostile bid by the May 29 deadline, this restriction will lift at the end of November.
These discussions, which began in June last year, also encompass the Sales Agreement for Debswana's rough diamonds and the extension of mining licenses.
The outcome of these negotiations is crucial in determining whether Anglo American, the UK-based parent company of De Beers, can sell its De Beers shares to another entity. Although there have been rumours that Anglo is currently selling, these claims have been denied by industry insiders, as both parties have signed a Statement of Principles and later, a Heads of Terms agreement.
Anglo American had previously indicated plans to sell or demerge significant parts of its operations, including De Beers and its platinum division, as part of a strategy to focus on areas such as copper, premium iron ore, and crop nutrients.
Botswana raised concerns about this, drawing her partner to the fact that in accordance with the original agreement she has the first right of refusal, they cannot sell without having informed her to consider its interests, particularly in light of the rejection of a £34 billion takeover bid from Australian rival BHP, which could have left Botswana dealing with a hostile investor.
The Botswana government and De Beers have yet to finalise the renewal of their 10-year partnership agreement, which includes the planned US$6 billion expansion of the Jwaneng mine, a key asset in De Beers' portfolio.
Earlier this year, President Dr Mokgweetsi Masisi attended the 2024 JCK Las Vegas show, where he advocated for Botswana’s position, as the country faced potential challenges with Anglo being a target of takeover bids. The
government holds 15 percent of De Beers' shares and 50 percent of its Botswana-based mining operations through Debswana.
In an interview with the Botswana Guardian, Permanent Secretary in the Ministry Of Minerals and Energy, Khowe Pelalelo explained the position as follows:
On the 30 June 2023, the Government of the Republic of Botswana and De Beers Group signed Statement of Principles and subsequently signed Heads of Terms on the 30th September 2023 articulating a comprehensive framework for the new 10-year Sales Agreement for Debswana’s rough diamond production through to 2033, and the 25-year extension of the Debswana mining licenses through to 2054.
The Heads of Terms provide further detail and clarity to the commercial and operational aspects towards concluding long form operational Agreements between the two partners.
The parties are positive that the long form operational Agreements are at a conclusive end. Notably, the Government is also exploring the possibility of increasing its stake in De Beers in light of the possibility of Anglo’s strategic move to sell DeBeers. Botswana is a 15 percent shareholder in De Beers and intends on possibly increasing its stake by exercising its pre-emption rights under the current agreement and receiving a first right to purchase or not the shares to be sold.
Diamond industry experts, both locally and internationally, have confirmed that the negotiations are in their final stages, with those involved currently focused on drafting the agreement. They emphasise the undeniable fact that Botswana contributes 70 percent of De Beers' value.
Botswana's position is clear: while De Beers cannot exist without Botswana, the country can thrive without De Beers. Should Anglo attempt to sell before reaching an agreement, they would essentially be selling "just a shell." Industry players argue that it would be wise for Anglo to wait before selling, as doing so now could result in Botswana claiming 70 percent of De Beers' value, leaving only 30 percent to be sold, which would not be feasible.
One industry insider mentioned that Anglo plans to sell its diamond interests by the end of next year. However, since De Beers is not a publicly listed company—only Anglo is—any potential buyer aiming for control of De Beers would likely lose interest if much of its value has already been sold off.
Experts also stress that De Beers should not be sold while negotiations with Botswana are ongoing, as any buyer would face uncertainty without clarity on the Botswana agreement, which is a key factor. They highlight that purchasing De Beers means buying into long-term commitments.
The situation is highly complex, and selling in pieces would not be effective. Botswana itself has been advised not to increase its shareholding beyond 25 percent, as putting too many resources into one venture could be risky.
This week, the UK-based financial website, ‘This is Money’ published an article titled "Anglo American Braced for Fresh Takeover Turmoil: De Beers Owner Left Vulnerable as Shares Slide."
The article highlights that when Duncan Wanblad initiated the largest restructuring in Anglo American’s 107-year history to fend off unwanted takeover attempts from Australian mining giant BHP, he faced a significant challenge.
In the four months since the company’s CEO announced plans to sell Anglo’s nickel, coal, De Beers diamond, and platinum businesses within two years, the situation has only become more difficult.
Wanblad’s efforts to refocus the FTSE 100-listed company on its prized copper assets and stabilise its balance sheet have been hindered by falling commodity prices, a steep drop in Anglo’s share value, and a fire at its flagship coal mine in Queensland.
As a result, Anglo American is now more vulnerable to a takeover than ever, potentially at a lower price, having previously rejected a £39 billion offer from BHP. This risk is about to come into sharp focus for Anglo’s shareholders.
Under Takeover Panel rules, BHP, as the previously rejected bidder, must wait six months before making another offer. Since BHP chose to walk away rather than pursue a hostile bid by the May 29 deadline, this restriction will lift at the end of November.
