Botswana has earmarked 890 million pula ($65 million) in its national budget to acquire a 24% stake in the Belgian diamond trading company HB Antwerp, as revealed in documents related to the national budget. This move advances a deal that President Mokgweetsi Masisi indicated in November was nearing finalization.
The valuation of HB Antwerp, founded in 2020, stands at $275 million, according to calculations by Reuters. The company reported a revenue of $251 million in 2022, as stated on its website.
The decision to purchase the stake in HB Antwerp follows discussions during negotiations for a new sales contract with De Beers in March. Botswana announced an agreement to acquire a 24% ownership interest in HB Antwerp and to provide it with rough diamonds for a duration of five years through the state-owned Okavango Diamond Company (ODC).
Although Finance Minister Peggy Serame did not specify the expected cost of the HB Antwerp shareholding during her 2024/25 national budget speech on Monday, expenditure estimates released on Wednesday and reviewed by Reuters indicate a figure of 890 million pula.
The diamond market continues to face challenges in recovering from the repercussions of excessive inventories last year, stemming from subdued demand and competition from lab-grown gems.
The proposed transaction garnered attention in September when Lucara Diamond Corp, the owner of the Karowe mine in Botswana, terminated its sales agreement with HB Antwerp, citing financial irregularities.
Bonjo Mathumo, spokesperson for HB Antwerp Botswana, declined to comment on the deal.
Botswana views this deal as an opportunity to capitalize on the potential profits from the downstream diamond industry, including cutting and polishing, a prospect that President Masisi highlighted was not available under previous agreements with De Beers.
Last June, Botswana and De Beers reached a ten-year diamond sales agreement, which will increase ODC’s share of Debswana output to 30% from the previous 25%, with a further increase to 40% in five years and ultimately reaching 50% by the conclusion of the new contract.
