Botswana wants quick separation of De Beers from Anglo
Reuters | May 29, 2024 |
Debswana is a major contributor to the national economy of Botswana, making up a fifth of the country’s GDP. (Image courtesy of Debswana.)
Botswana is hoping for a quick separation of De Beers from the Anglo American Plc group before the UK-listed diversified mining giant is exposed to a possible hostile takeover, President Mokgweetsi Masisi said on Wednesday.
Botswana, the world’s top diamond producer by value, is finalizing a new ten-year gem sales deal agreed last June with De Beers. The two parties had agreed to finalize the deal by June 28 this year, but the proposed takeover of Anglo by the BHP Group has brought uncertainty to the sales agreement.
Anglo has rebuffed BHP and on Wednesday rejected the Australian company’s request for more time to discuss its latest $49 billion takeover offer.
Anglo plans to divest from De Beers and its other coal, nickel and platinum assets to focus on energy transition metal copper.
Masisi said he would meet Anglo and De Beers executives at jewellery industry trade event the JCK Show in the United States this week.
“One thing we don’t want is a hostile owner. We are watching this very closely because whoever buys Anglo, if it is sold, will then be the owner of De Beers and De Beers is our strategic partner with whom we are at the tail end of our negotiations,” Masisi told reporters as he departed for the United States.
Botswana is a 15% shareholder in De Beers and accounts for 70% of the company’s annual rough diamond supply.
The renewal of the sales deal and mining rights for Botswana and De Beers’ joint venture mining company, Debswana, is vital to the southern African country, which gets about 40% of its revenue, 75% of its foreign exchange earnings and a third of national output from diamonds.
“We have received some assurances and the reason for travelling is to go and get that first hand from the principals of Anglo and De Beers that they are committed to separating De Beers from Anglo before Anglo is sold, if it is sold,” Masisi said.
Botswana needs to finalize the deal with De Beers so that it can begin to benefit from the renegotiated terms agreed in June 2023, which include a higher allocation of rough diamonds from Debswana to the state-owned Okavango Diamond Company (ODC) and a $750 million investment by De Beers into other economic sectors over the next ten years.
(By Brian Benza; Editing by Nelson Banya and Mark Potter)
Gem Diamonds Discovers Sixth 100+ Carat Stone, Shares Rise by 8%
This marks the sixth diamond over 100 carats discovered at the Letšeng mine this year, highlighting the mine's continued success in producing high-value gemstones.
Recovered on May 28th, the 212.9-carat diamond is a Type IIa, the most valued and collectable category of diamonds, known for containing very little or no nitrogen atoms in their crystal structure. This latest discovery has led to an 8% rise in Gem Diamonds' shares.
The Letšeng mine, which Gem Diamonds owns 70% of, is one of the world’s ten largest diamond operations by revenue and the highest dollar-per-carat kimberlite diamond mine globally. Located at an elevation of 3,100 meters (10,000 feet) above sea level, it is also one of the world’s most elevated diamond mines.
Despite the recent discovery, the diamond mining industry is facing challenges due to weak demand for diamond jewellery in the US and China and the rising popularity of cheaper, laboratory-grown diamonds. In 2015, man-made diamonds were barely present in the market, but by last year, they accounted for more than 10% of the global diamond jewellery market, according to industry specialist Paul Zimnisky.
The market values of small to medium diamond mining companies, including Canada’s Lucara (TSX: LUC), South Africa’s Petra (LON: PDL), and Gem Diamonds, are around $100 million or less. This is only about a third or a fourth of the price the large stones they aim to find may be worth.
In early trading, Gem Diamonds' stock was up 1.01p at 13.51p, reflecting the positive market response to the latest significant find at Letšeng.
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