Gaborone, Botswana – The new sales agreement that will extend the 54-year partnership between De Beers Group and the Botswana government for another 10 years is one step closer to being finalised.
In a joint press release issued on Sunday, the two said they had signed “heads of terms” for the agreement.
Heads of terms, also known as letters of intent, are non-binding pre-sale agreements that outline some of the key points of a deal.
For De Beers and Botswana, the heads of terms provide “additional detail and clarity” to the commercial and operational aspects of the agreement reached in principle earlier this year.
These include details on the allocation of Debswana supply, economic arrangements, talent development, beneficiation supply and value chain development, and the Diamonds for Development Fund, which is designed in part to help Botswana grow its economy beyond the diamond industry.
Debswana, a portmanteau of “De Beers” and “Botswana”, is the joint venture through which De Beers and Botswana operate diamond mines in the country.
Debswana currently has three active diamond mines, Jwaneng, Orapa and Letlhakane, with mine lives ranging from 13 years (Jwaneng, 2036) to 20 years (Letlhakane, 2043).
Lefoko Maxwell Moagi, Botswana’s Minister of Minerals and Energy, described the heads of terms as “an important step forward” in finalising the new 10-year agreement.”The new chapter we are embarking on will see more skills development and job creation for Batswana, as well as more local beneficiation of diamonds. As we celebrate our nation’s journey on this 57th Independence Day, this important milestone heralds an exciting new era in Botswana’s development.”
De Beers CEO Al Cook said, “We are very pleased to have signed the heads of terms for an agreement that will deliver significant new investment and support the country’s development aspirations.
“The agreement also underpins De Beers’ long-term leadership in the diamond industry and secures our equal share of the world’s largest diamond resources for decades to come.”
De Beers and the Botswana government reached an agreement in principle for a new 10-year sales contract on 30 June, following several extensions to the current agreement.
Under the terms of the new agreement, De Beers and the government will continue to share Debswana’s rough diamond production until 2033, with Botswana receiving more diamonds over time.
Under the agreement, the share of Debswana’s supply sold through the government-owned Okavango Diamond Company will initially increase from 25 per cent to 30 per cent, gradually rising to 50 per cent in the final year of the contract.
Mining licences in the country will be extended until 2054.
The joint announcement by De Beers and Botswana on the progress of the deal comes shortly after Botswana’s President Mokgweetsi Masisi publicly stated that the country’s new deal with De Beers was only an “agreement in principle” and not a signed, final contract.
