De Beers and the government of Botswana have extended their current sales contract by one year.
The current agreement was due to expire at the end of 2020. It will now expire at the end of 2021.
The decision was made because of “the logistical challenges presented by the [COVID-19] pandemic,” said a De Beers statement. “The extension, which will extend the terms of the existing agreement, will provide further time for discussions regarding the contract renewal.”
In July, De Beers CEO Bruce Cleaver told JCK that the contract negotiations had been held up because of “the inability to get in the same room with our counterparts.
“It’s really a function of not being able to gather with our counterparts in a room together. As soon as we can do that, we will press on with that, and I’m sure we’ll get this resolved.… We always do.”
The current 10-year contract allows De Beers to sell 85% of the rough diamonds produced by Debswana Diamond Company, the country’s major diamond producer. The other 15% of Debswana’s assortment is sold by Okavango Diamond Company, a sales group owned by the Botswana government. Debswana is a joint venture owned equally by De Beers and the government of Botswana.
An estimated 70% of the diamonds sold by De Beers are mined in Botswana. Earlier this year, Botswana’s minister of mineral resources, green technology, and energy security, Lefoko Moagi, told Bloomberg that his country wanted more diamonds cut and polished locally.
Last month, a mine workers union leader told Reuters that Debswana planned to close the smallest of its four mines, Damtshaa, for three years because of the slowdown in the market, possibly eliminating 500 jobs.
Overall, though, the mood in the diamond market has turned more positive recently, with De Beers reportedly raising prices some 2–3% at its most recent sight, according to Bloomberg.
Top: The Jwaneng mine in Botswana (photo courtesy of Debswana Diamond Company)
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