De Beers senior executives disclosed this week that the ‘in principle’ agreement they have reached with Botswana government is the best that each party could have ever got, given the prevailing circumstances.
Executive Vice President- Diamond Trading Paul Rowley and De Beers Executive Head of Human Resource Malebogo Mpugwa were addressing the media days after Botswana Government and De Beers announced they have concluded a mining license and sales agreement.
The agreement among others include a new 10-year Sales Agreement for Debswana’s rough diamond production through to 2033 and a 25-year extension of the Debswana mining licences through to 2054.
Mpugwa, who joined the De Beers executive committee some months ago, told the gathering that the agreement, which is expected to be fully finalised in the coming months, will provide an even better platform that will lift efforts aimed at diversifying the economy.
She was quick to point out that the planned multi-billion Pula Diamonds for Development Fund, with an upfront investment by De Beers of BWP 1 billion ($75 million) and further contributions over the next 10 years that could total up to P10 billion ($750 million) –will create substantial additional value to the Botswana economy. She said the fund will target sectors of the economy which can bolster economic growth in the shortest of time possible.
"We are sitting between 20-30 percent unemployment, and we have a population of 40 percent being the youth, which means unemployment actually affects the youth more."
The fund is also expected to wean off the economy from dependency on mining. Mining is the biggest single sector, which also contributes more to the economy.
“This fund will help in terms of accelerating economic diversification and agriculture is one sector that has the potential to be scaled up and lead economic diversification, tourism also.
“We will be looking at those sectors to partner with the Government and accelerate economic creation of jobs and development of knowledge-based economy," she said.
Mpugwa disclosed the Funds will be run by an independent executive committee, which also include investment professionals.
“We are still to agree more on other specifics of the Fund itself, “she explained.
The new deal, which comes after much speculation, which included a possible pull out by Botswana from the deal a is expected to ‘significantly expand Botswana’s footprint and leadership position across the diamond value chain’.
Government-owned Okavango Diamond Company (ODC) will be getting 50 per cent of Debswana rough diamonds over the duration of the agreement.
From the start of the new contract period ODC will receive 30 per cent of Debswana production, progressively increasing to 50 per cent by the final year of the contract, ensuring a sustainable transition path for both partners.
Rowley said, the ten-year transition period in terms of Debswana supply to ODC, will enable the latter to fully build capacity and systems expected from increased supply.
In yet another historic agreement that is contained in the fresh deal, De Beers, will for the first time allow Botswana to explore for diamonds. The country will also be free to explore even outside.
Botswana Government will have the opportunity to decide which area and country they have mutual interest to explore and they will have the first right of refusal when De Beers invests in new exploration projects.
"We have given the Government of Botswana the opportunity to engage in international exploration with De Beers. The Government of Botswana can partner with De Beers to explore and search for diamonds in Botswana and other countries of mutual interest that we agree upon.
“This is to ensure that when there is no longer production in the diamond mines in Botswana, Botswana will benefit from the revenue generated in other countries," Mpugwa said.
De Beers owns Botswana’s biggest diamond producer, Debswana with Botswana on a 50-50 percent shareholding.
Executive Vice President- Diamond Trading Paul Rowley and De Beers Executive Head of Human Resource Malebogo Mpugwa were addressing the media days after Botswana Government and De Beers announced they have concluded a mining license and sales agreement.
The agreement among others include a new 10-year Sales Agreement for Debswana’s rough diamond production through to 2033 and a 25-year extension of the Debswana mining licences through to 2054.
Mpugwa, who joined the De Beers executive committee some months ago, told the gathering that the agreement, which is expected to be fully finalised in the coming months, will provide an even better platform that will lift efforts aimed at diversifying the economy.
She was quick to point out that the planned multi-billion Pula Diamonds for Development Fund, with an upfront investment by De Beers of BWP 1 billion ($75 million) and further contributions over the next 10 years that could total up to P10 billion ($750 million) –will create substantial additional value to the Botswana economy. She said the fund will target sectors of the economy which can bolster economic growth in the shortest of time possible.
"We are sitting between 20-30 percent unemployment, and we have a population of 40 percent being the youth, which means unemployment actually affects the youth more."
The fund is also expected to wean off the economy from dependency on mining. Mining is the biggest single sector, which also contributes more to the economy.
“This fund will help in terms of accelerating economic diversification and agriculture is one sector that has the potential to be scaled up and lead economic diversification, tourism also.
“We will be looking at those sectors to partner with the Government and accelerate economic creation of jobs and development of knowledge-based economy," she said.
Mpugwa disclosed the Funds will be run by an independent executive committee, which also include investment professionals.
“We are still to agree more on other specifics of the Fund itself, “she explained.
The new deal, which comes after much speculation, which included a possible pull out by Botswana from the deal a is expected to ‘significantly expand Botswana’s footprint and leadership position across the diamond value chain’.
Government-owned Okavango Diamond Company (ODC) will be getting 50 per cent of Debswana rough diamonds over the duration of the agreement.
From the start of the new contract period ODC will receive 30 per cent of Debswana production, progressively increasing to 50 per cent by the final year of the contract, ensuring a sustainable transition path for both partners.
Rowley said, the ten-year transition period in terms of Debswana supply to ODC, will enable the latter to fully build capacity and systems expected from increased supply.
In yet another historic agreement that is contained in the fresh deal, De Beers, will for the first time allow Botswana to explore for diamonds. The country will also be free to explore even outside.
Botswana Government will have the opportunity to decide which area and country they have mutual interest to explore and they will have the first right of refusal when De Beers invests in new exploration projects.
"We have given the Government of Botswana the opportunity to engage in international exploration with De Beers. The Government of Botswana can partner with De Beers to explore and search for diamonds in Botswana and other countries of mutual interest that we agree upon.
“This is to ensure that when there is no longer production in the diamond mines in Botswana, Botswana will benefit from the revenue generated in other countries," Mpugwa said.
De Beers owns Botswana’s biggest diamond producer, Debswana with Botswana on a 50-50 percent shareholding.
