“We have mines all over the world and not only in Botswana. We have mines in Canada, South Africa and Namibia,” says the outgoing CEO of De Beers, Bruce Cleaver, noting that the company has signed a mineral investment contract with President Joao Lourenco of Angola for De Beers to intensify exploration there. “Angola is one country where we could find a mega mine,” he says.
Cleaver was responding to a question from a journalist at a media roundtable organised by De Beers at its offices in Gaborone on Monday this week. The scribe wanted to know whether De Beers had a contingency plan to ensure that there is security of supply of diamonds and that business continuity will not be disrupted, should negotiations between the company and Government of Botswana fail.
Cleaver was discussing topical matters around the diamond industry and De Beers performance with a select of business scribes. Chief among questions thrown at him was centred around negotiations between the government and De Beers. The journalists wanted to know what De Beers would do if the government decided to cut ties with the diamond industry behemoth, considering the value of diamonds it gets from Botswana. Weeks ago, President Mokgweetsi Masisi told a Botswana Democratic Party rally in his native Moshopa that Botswana stands ready to walk should the outcome of the discussions be not what it wants. This is because, as the President said, Botswana is not getting enough out of its diamonds.
“The agreement that we have with our partners is not working as expected,” Masisi said. “We are currently deep in negotiations to get a better deal and we will get it. We will support the cabinet and Minister Lefoko Moagi to ensure that Botswana gets better returns from these diamonds that we mine.” Under the current agreement, De Beers, through Global Sightholder Sales, is responsible for marketing 75 percent of Debswana’s output while the state-owned Okavango Diamond Company (ODC) is entitled to the remaining 25 percent. It is understood Botswana would like the ODC portion raised to 50 percent.
“We have realised that these diamonds make a lot of money because we now take 25 percent of the production,” Masisi told the political rally in Moshopa. “We are in discussions with another company to take these raw diamonds and change them before they are sold and then sell them as finished products, either as rings, earrings or necklaces.” “We are dealing with a big company (De Beers). It is the first time in its history that it is being shaken like this. We want what is ours.”
The President emphasised that the diamonds belong to Botswana, hence the country wants to get a better share of them and is in negotiations with De Beers to achieve this goal. “If we fail to reach an agreement, every party should take what is theirs and part ways,” he said at the Botswana Democratic Party (BDP) rally.
While the essence of the position of President Masisi’s administration gives is that Botswana is being ripped off by De Beers, Cleaver has countered that by presenting a picture of beneficiation created by the partnership that he says has created much value for Botswana. “I have no doubt that we will get a deal that is fair for both of us,” he told invited journalists this week. “I did say to President Masisi that I will continue to be involved in the negotiations to ensure that a fair deal is achieved.
“I am very proud of De Beers’ partnership with Botswana, which has been hailed as the best Public Private Partnership (PPP) in the world, since 1967. Our contribution to Botswana is what we are proud of. We get 19.2 cents on every US dollar generated by Debswana and the remaining 80.8 cents goes to the government. The economic contribution De Beers makes in Botswana goes further than our core investment in Debswana.”
Referring to the arrangement as common knowledge, he noted that the Government of Botswana and De Beers Group are 50/50 partners in Diamond Trading Company Botswana (DTCB), adding that this means that after Debswana, the government also benefits from DTCB. The company buys 100 percent of Debswana’s annual production, 25 percent of which is sold to Okavango Diamond Company while the rest goes to De Beers.
Further, Cleaver says through De Beers Global Sightholder Sales (DBGSS), De Beers brings diamonds from all over the world and aggregates them in Botswana and brings global clients into the country, which is a significant contribution. Significantly, the Botswana Government owns 15 percent in De Beers, which owns DBGSS. “Some of the benefits of this agreement include the growth in volume of diamonds traded in Botswana to the tune of billions in USD, which goes through the banking institutions,” Cleaver said.
This, he noted, has resulted in significant growth in employment as well as downstream and other support services. “I believe this is a significant contribution,” he said, “and that’s what we offer in these negotiations which have unfortunately taken longer than expected.” There are reasons for these delays, Cleaver volunteered, mentioning COVID-19 as the first of the reasons and secondly that for the first time ever, they are negotiating for two agreements ‐ renewal of the Sales Agreement and renewal of mining licence agreements for Orapa, Jwaneng, Letlhakane and Damtshaa mines.
Given the secretive nature of the partnership, the invited journalists asked if it was a not a concern that the De Beers brand could get hurt in the long term, given the growing narrative that the government is being ripped off in the deal. Predictably, Cleaver would not discuss details of the existing agreement but expressed confidence that once a new deal is signed, details of the new agreement will be made public because De Beers has nothing to hide.
At the political rally in Moshopa, President Masisi said that the government is negotiating with other parties to possibly take over from De Beers. Scribes asked Cleaver how he felt about this prospect or competition in general. With regard to other players, Cleaver asserted that while the mining industry has multiple players, it remains dominated by De Beers. “Two other players have grown bigger while other players are smaller,” he said.
“You need scale to be successful in this business because all these other things we do, like spending money, driving customer demand, investing in tracking technology and dealing with other related issues, need scale. “The two other players got bigger while others fell away but it is not De Beers style to speak about competition. The core of how we do things is about playing the ball and playing it well. We are not in the business of critisising other players.”
One of the highlights of Cleaver’s seven years as CEO of De Beers is the relocation of DTC from London to Gaborone. At his meeting with invited journalists, Cleaver underscored the fact that De Beers does not cut and polish diamonds and that only sightholders do. “We sell the diamonds from Botswana, Canada, South Africa and Namibia to the sightholders who then beneficiate, which is called cutting and polishing, the diamonds,” he said. “The government has a legitimate ambition that each diamond mined in Botswana must be cut and polished in Botswana. We have nothing but absolute admiration for that. When we started here, there were six diamond cutting and polishing factories. At the end of 2022, there were 31 of them. These were international companies which brought their intellectual properties here.”
This, he emphasised, was achieved because De Beers negotiated with the sightholders to bring their business into Botswana and in return guaranteed them a lifetime supply of diamonds. Cleaver characterised this is a great example of Debswana participating in the value chain. Another example that he cited is the skills exchange and human resource development that has happened as a result of this partnership. In his view, the number of Batswana employed by De Beers at its offices in London or the USA shows how serious the company is about skills development.
De Beers contingency
The journalists asked Cleaver what would happen to De Beers in terms of security of supply of diamonds and business continuity, should the company fail to get the agreements renewed. “We have mines all over the world and not only in Botswana,” came the answer. “We are ramping up production and expanding in Venetia (South Africa). “Angola is a very prospective market, probably the last country in the world where you would find a big new diamond deposit. I am sure we will find more deposits in Botswana but they would not be the size of Jwaneng or Orapa. Angola is the one country where we could still find a mega mine.
“We have been in Angola for years but we never actually came to terms in an economic deal but we kept our people in Angola. Recently, we have a very favourable deal which I signed with President Joao Lourenco last year. We have a mineral investment contract over two different big areas of land. We will start spending money in Angola in 2023 to explore for diamond deposits. “ Cleaver noted that De Beers is not exploring only in Angola but is doing the same in South Africa, here in Botswana and in Namibia. “The prospects are exciting,” he added.
It has been alleged that Botswana’s bold posture that it is ready to walk away if it does not get a more favourable deal emanates from the government’s discussions with. Upon being contacted, the Minister of Minerals and Energy, Lefoko Moagi, asked this publication to wait for the process to end and promised to make the details available. “Any reference to these issues is subject to the reader’s interpretation and can be injurious to the negotiations,” he said briefly.