Deal paves way for Botswana to hold on to more of its output
JOHANNESBURG—Botswana will increase its take of the diamonds De Beers mines there from 25% to 50% in 10 years’ time, part of a deal that extends the company’s relationship with the country while loosening its hold on its output there.
Shares in Anglo American NGLOY 4.06%increase; green up pointing triangle, the U.K.-listed mining company that owns 85% of De Beers, rose more than 4% in afternoon European trading. The agreement in principle was announced over the weekend, but De Beers Chief Executive Al Cook provided details of the pact on Monday. Negotiations over the new deal were watched closely in the diamond industry.
The relationship is deeper than most that involve a miner and a host state. De Beers is the world’s biggest producer of rough diamonds, by value. Botswana, meanwhile, accounts for 70% of De Beers’s worldwide production.
Under the current deal inked in 2011, De Beers gets 75% of production from Debswana, a 50-50 joint venture between the government and De Beers. De Beers sells those rough diamonds to buyers that polish and sell them. Botswana sells its share of production from the pact.