Botswana wants more control over its diamonds, even as the gems are losing their shine.
Driving the news: Botswana is seeking a controlling stake in De Beers — arguably the most famous name in diamonds — as owner Anglo American looks to sell the beleaguered diamond producer. The deadline for bids is reportedly set for early this month.
- Botswana currently has a 15% stake in De Beers, and also owns half of Debswana, a joint venture with De Beers that operates four diamond mines in the country.
Catch-up: Anglo is exploring a sale of De Beers as part of a restructuring plan it agreed to last year after fighting off a takeover bid from rival miner BHP. De Beers has been a drag on Anglo’s earnings as natural diamond demand has dropped since the boom of lab-grown stones.
Why it matters: Botswana’s interest in De Beers is part of a wider global trend of developing nations asserting control over natural resources impacting their economy and environment. Other examples include Mali taking over gold mines and Niger nationalizing uranium mines.
- Diamonds account for a third of Botswana’s national revenue, and the government wants to prove that it could do a better job at reversing the damaging sales slump.
Yes, but: Critics are skeptical that Botswana will be able to proffer an attractive bid as it’s already dealing with a hefty deficit and has little borrowing experience besides development loans. That said, it’ll be hard for Anglo to get a deal done without Botswana’s blessing.—QH