Botswana’s new president, Duma Boko, has pledged to restore relations with Anglo American’s De Beers diamond enterprise after his sudden election win on this planet’s largest producer of the gemstone by worth.
Boko’s celebration, the Umbrella for Democratic Change, defeated the Botswana Democratic party, which held uninterrupted energy since independence in 1966 — the yr earlier than De Beers found diamonds within the southern African nation.
“We’ve to attempt to safeguard the goose that lays for us the golden egg,” Boko stated in his first speech as president on Saturday, of a as soon as unusually rock-solid partnership between a rustic and a miner that was thought-about among the many most equitable within the business.
Botswana, one in every of Africa’s most affluent nations, owns the 15 per cent of De Beers that Johannesburg-listed Anglo doesn’t personal, and in addition has half of a three way partnership with the corporate Debswana, which supplies many of the group’s diamonds.
However Boko is inheriting blemished ties after populist posturing by his predecessor over a renewal of phrases, a downturn within the world diamond market and Anglo’s plans to exit De Beers because it warded off a £39bn takeover provide from BHP earlier this yr.
De Beers’ manufacturing in Botswana fell a 3rd to 4mn carats within the three months to September versus a yr earlier — an extra warning signal for the nation’s essential export earner.
The IMF has lower estimates for Botswana’s progress this yr to only 1 per cent, down from 5.5 per cent in 2022, due to the diamond market rut, which partly displays surging gross sales of cheaper lab-grown options.
Former president Mokgweetsi Masisi drove a tough discount with De Beers earlier than the elections, accusing it of getting “short-changed” Botswana and “leaving us in poverty [while] they get wealthy”.
Alongside lengthened mine licences, Masisi negotiated a brand new 10-year gross sales contract through which Botswana can ultimately hold as much as half of Debswana’s output to promote for itself slightly than cross on to De Beers, up from 1 / 4 at current.
The deal mirrored a want for Botswana to wring extra wealth from diamonds past mining, but it surely has taken a yr to signal.
Zibani Maundeni, a political analyst on the College of Botswana, stated the notion of how Masisi dealt with these talks contributed to his election loss.
Some voters feared his confrontational method compromised relations with the corporate and Botswana’s financial stability, Maundeni stated. “The negotiations have been very antagonistic, and this contributed to the autumn in diamond gross sales.”
Boko stated he would maintain new talks with De Beers, suggesting he may be keen to barter totally different phrases.
Any such negotiations might not final lengthy. Anglo’s chief govt Duncan Wanblad insisted in September that he wanted to offload De Beers by subsequent yr and that it was a “low chance final result” {that a} sale might drag into 2026.
In a sale or itemizing Botswana’s authorities might need to work out find out how to cope with new majority shareholders or assess whether or not to extend its personal stake, analysts have stated.
De Beers didn’t reply detailed questions, however stated this was “one of the profitable and long-standing public-private partnerships on this planet” and that it will “proceed to work with Botswana’s authorities in assist of shared goals”.
Botswana has typically been praised for managing its diamond wealth successfully and to the good thing about its 2.5mn folks, serving to to lift GDP per capita above $7,000 in 2021, one of many highest in Africa.
However in recent times deficits have grown extra widespread after years of commerce and monetary surpluses, and excessive youth unemployment and inequality additionally price Masisi’s celebration on the polls.
Ian Khama, Masisi’s predecessor as president, stated Boko’s new authorities wanted to repair the connection with De Beers. Masisi’s public criticism of De Beers was “completely irresponsible”, Khama informed the Monetary Instances.
“You don’t deal with your companions like that,” he stated of Masisi’s strong-arm ways. “A variety of the event and infrastructure [that] we have been in a position to obtain within the nation got here from diamonds, and from having companions like De Beers.”
The previous president, the son of Botswana’s first post-independence chief and BDP founder Seretse Khama, described the shock election consequence as a “revolution” and rejection of Masisi’s model of politics.
Khama left the presidency in 2018 after 10 years, handpicking Masisi as his successor. However the relationship shortly degenerated, and Khama fled into exile to South Africa amid allegations from Masisi’s authorities that he stole $10bn from central financial institution coffers.
Khama has at all times denied the claims, which he has known as implausible and fabricated.
“I received the overwhelming sense that folks have been fed up with the BDP,” Khama stated, including that he had solely returned to the nation six weeks in the past. “Whereas the ruling celebration’s loss isn’t a shock, I by no means anticipated them to get such low numbers.”
Khama stated that with a brand new celebration in cost, Botswana stood a greater probability of boosting the financial system if the brand new authorities might resist what he characterised as useful resource nationalism.
He cited a 2022 ban on vegetable imports from South Africa, which Masisi offered on the time as a “highly effective transfer to spice up our native farmers and financial system”. Such insurance policies scared off traders, Khama stated.
As Boko prepares for what will be the most tough patch but of a protracted relationship, De Beers has already launched its newest advertising marketing campaign geared toward reviving demand. Whereas the corporate has historically stated pure diamonds are “ceaselessly”, this season they are going to be “definitely worth the wait”.
