Lucara Diamond Corp. has announced the reinstatement of its rough-supply agreement with Belgian manufacturer HB Antwerp, marking a significant development in the diamond industry. The renewed 10-year contract reflects the terms of their previous arrangement, wherein HB commits to purchasing all rough diamonds over 10.8 carats sourced from Lucara’s Karowe mine in Botswana. The pricing mechanism for these diamonds will be determined based on the projected polished outcome of each stone, utilizing cutting-edge scanning and planning technology. Additionally, Lucara will receive a supplementary “top-up” fee, representing a portion of the profits generated from the sale of the polished diamonds.
This renewed partnership not only secures a steady cash flow for Lucara, thereby supporting the ongoing development of Karowe’s underground project, but also aligns with the Botswana government’s strategic initiative to diversify downstream operations within the diamond sector. Notably, the government has earmarked $65 million in its recent budget to acquire a 24% stake in HB, further solidifying its commitment to the collaboration.
The decision to renew the agreement comes after Lucara terminated its previous contract with HB last year, citing significant financial breaches following the departure of cofounder and managing partner Oded Mansori. This move had notable implications for Lucara’s financial performance, leading to a revision of its full-year forecast and the exploration of new supply agreements. However, reports emerged suggesting pressure from the Botswana government for Lucara to reinstate its partnership with HB. Additionally, HB has a separate five-year supply agreement with Botswana’s state diamond company, Okavango.
Pending approval from Lucara’s lenders, the new contract will be retroactively effective from December 1. Lucara has been supplying rough diamonds to HB since that date, underscoring the continuity of their business relationship.
William Lamb, CEO of Lucara, expressed his satisfaction with the renewed partnership, emphasizing its critical role in ensuring stability and sustainability in their operations. He highlighted the strategic importance of the collaboration with HB Antwerp in consolidating their position in the market.
