The newly signed deal between the government and diamond mining giants, De Beers, has been hailed as a major milestone as the country stands to benefit through additional revenue, technological advancement and employment opportunities.
The Minister of Minerals and Energy, Mr Lefoko Moagi said in a press conference in Gaborone Thursday that the new Sales Agreement offered Okavango Diamond Company (ODC) 30 per cent of Debswana production, up from 25 per cent.
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“We had to capacitate our citizens to have access to these goods hence we decided to this allocation,” he said.
Debswana is a 50-50 joint venture company between De Beers and the government while ODC is wholly owned by the government.
The ODC was established following a sales agreement with De Beers and initially it was allocated 15 per cent which has since reached 25 per cent. A new 10 year sales agreement offers the entity 50 per cent by the end of the agreement.
However, Mr Moagi said under the new agreement, the ODC was free to sell its production from the De Beers clients, called sightholders.
“We have sightholders who came through De Beers and ODC have to generate its own clients,” he said.
He also said instead of holding auction sales which did not provide a guarantee for sales, the entity would now introduce contracts as well as spot sales.
“De Beers has its own price book and ODC will now have to develop its own,” he said adding the country could not be told how to sell its diamonds and be restricted to De Beers price book.
Mr Moagi said the 10 year sales agreement could be extended by 5 years based on satisfaction of beneficiation.
He said revenue sharing formula was also flawed and had to consider taxes and royalties, adding it favoured De Beers over Botswana. “We have been getting a raw deal,” he said.
Mr Moagi said the government and De Beers would form a new exploration entity to undertake mineral explorations in other countries. “As Botswana, we are free to do our own exploration as well,” he said.
Regarding special diamonds and exceptional stones, Mr Moagi said the government and De Beers would jointly find the best person to polish and cut them before they could be sold and they would both share the revenue.
Botswana is a natural diamonds country and Minister Moagi said together with De Beers, they would embark on a marketing strategy against lab grown diamonds, synthetics.
“Under the new agreement, youths stand to benefit mainly through development and advancement of technology,” he said.
Mr Moagi said the two parties had agreed for the establishment of an innovation academy in the country and technology being developed in other countries would over the years be done in Botswana.
“We want Batswana to derive wealth, this is an evolving partnership,” he said as he thanked the past negotiators.
“There was a time when Botswana only mined diamonds and they were sold at the then Central Selling Organisation (CSO) but through negotiations, the Diamond Trading Company Botswana (DTCB) was established.”
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Other than the diamond sales, Mr Moagi said the new agreement had established the Diamond Capital Fund and this was not a Corporate Social Responsibility (CSR) initiative.
He said this would be used to fund projects in agriculture and energy and would be managed by both parties and eventually handed to the government.