Botswana May Push For Better Terms Over Jwaneng Mine

Botswana may push for more favorable terms from De Beers in negotiating the renewal of a mining concession for the world’s largest and most profitable diamond mine.

The license for the Jwaneng mine runs out in two months, but neither the Botswana government nor De Beers has publicly announced that a routine 25-year renewal can be expected.

Describing the silence on the issue as “deafening”, Investec analyst Nick Hatch said it was possible that Botswana was “exercising some muscle on its De Beers mining partners”.

In February, De Beers said discussions concerning the license had started but no further details have been released. Company officials were not immediately available for comment today (Wednesday).

Hatch believes Botswana might be trying to force De Beers’ arm in an effort to help boost the country’s fledging diamond-polishing industry to bring added value and create jobs.

The terms achieved under a renegotiation would likely not be as favorable as they have been up to now for De Beers but it is possible they would not be very burdensome either.

Botswana owns half of the local diamond operating company Debswana and has a stake in De Beers itself.

Botswana might push for a change in the distribution method for its rough diamonds that are shipped to London and mixed with De Beers’ global production before being sold to polishers all over the world.

A refusal to renew the concession or a significant change in terms could have an impact on the earnings of De Beers and shareholder, Anglo American.

Last year, Jwaneng output accounted for $1.3 billion of the $2.25 billion of diamonds produced by Debswana.