COVID-19 related travel restrictions could result in De Beers failing to renew its sales agreement with joint venture partner, Botswana, before its year-end expiration.
Reuters said that whilst De Beers would be able to operate the joint venture with a temporary extension of the existing agreement, a delay in finalising a new one could be a setback for Botswana president, President Mokgweetsi Masisi’s job creation drive.
“The ideal situation would be to end the talks by December but there are no guarantees that will happen,” Mmetla Masire, Permanent Secretary in Botswana’s Ministry of Minerals, told Reuters in an interview on Monday. The government had resumed negotiations, but travel restrictions have slowed progress, he said.
For De Beers, a deal would provide another 10 years of clarity on the terms of its revenue from the source of 70% of its diamonds and 90% of its sales. “We remain focused on working with government regarding the next agreement and seeking to finalise it,” De Beers spokeswoman Kesego Okie told the newswire.
In 2011, De Beers agreed to transfer its global sightholder sales, which account for 90% of its total sales, from London to Gaborone, generating investment and thousands of jobs in the southern African country, said Reuters.
Neither De Beers nor Masire would give details of the current negotiations.
Avi Krawitz, an analyst from Israel-based diamond information provider Rapaport, said a sticking point was likely to be the government’s wish to increase its share of diamonds produced by Debswana from the 15% agreed in 2011, or to get a larger share of bigger stones.