Botswana deal with De Beers to bring added revenue to the country

Botswana’s newly-negotiated mining leases with diamond giant De Beers will earn the African country an additional 500 million pula (approximately $113.5 million) a year for their 25-year duration, a mines ministry official reportedly said on Wednesday.

“This is as a result of increased revenues which will accrue from the new diamond mine leases,” Mago Moshashane, deputy permanent secretary in the ministry of minerals, told Reuters. Moshashane declined to give further details.

Botswana extended leases late last year on four of the world’s most valuable diamond mines operated by Debswana, its 50-50 joint venture with De Beers, and is expected to sign a detailed agreement by mid-2005 establishing a local sales unit to promote local cutting and polishing of raw stones.

The new mine leases and financial terms are backdated to August 2004, although neither side has so far released details on what has already been agreed and what has yet to be finalised.

Finance Minister Baledzi Gaolathe said in February that the government and De Beers had signed a heads of agreement, but would finalize and sign a detailed agreement by the middle of 2005.

Diamonds are the mainstay of Botswana’s economy, accounting for the vast majority of export revenues, around a third of gross domestic product and nearly half of government revenues.

Debswana has said it expects 2005 output to match its record 2004 production of 31 million tons.