Botswana Seeks Diamond Dominance, Eyes Majority Of De Beers

Botswana is reportedly seeking a controlling stake in the leading diamond producer De Beers, potentially complicating Anglo American's AAUKF plans for the sale.

The sharp downturn in the global diamond industry has destabilized the market and rattled the economy of the southern African nation, which provides over a quarter of the world's production.

Botswana's Minister of Minerals and Energy, Bogolo Kenewendo, stated that the government is committed to taking a greater ownership stake in the company. "President Duma Boko remains resolute in his quest to increase Botswana's stake in De Beers to ensure Botswana's full control over this strategic national asset and the entire value chain, including marketing," Kenewendo said to The Financial Times.

The country already holds a 15% stake in De Beers and co-owns the Debswana joint venture, which forms the backbone of De Beers' production.

But frustrations are mounting in Gaborone over Anglo's handling of the sale process. "Our partners at Anglo American have, regrettably, failed to manage the process transparently or in coordination with the government and with our support," Kenewendo added.

Anglo, which is urgently restructuring following a failed takeover by BHP Group BHP, is under pressure to offload De Beers by year-end. A dual-track strategy is underway, involving both soliciting bids — due by early August — and exploring a public listing if a buyer doesn't emerge.

Yet, the timing is not in its favor. The diamond sector is in a prolonged slump, exacerbated by the meteoric rise of lab-grown diamonds. Synthetic gems now account for more than 50% of engagement rings in the U.S., and their affordability and identical physical properties have eroded consumer demand for natural stones.

That decline is evident in Anglo's latest earnings, which were released today. Rough diamond production at De Beers plunged 36% year-over-year in the second quarter to 4.1 million carats — its lowest quarterly output in over a decade. The company cited "continued production response to the prolonged period of lower demand."

Meanwhile, Botswana is paying the price for its heavy reliance on diamond exports. The country recently secured a $300 million loan from the African Development Bank to help address financial gaps, as the budget deficit may widen beyond 7.5% of GDP.

So far, Botswana has maintained its investment-grade rating (a rarity in Africa), but Moody's revised the long-term outlook to negative, citing its reliance on the diamond sector.

Still, officials say financing a bid for De Beers isn't the issue. "The money is not a problem," Kenewendo said, though no specifics were offered.

Anglo responded with a carefully worded statement: "As our long-standing partner, we are of course, engaging the government of the Republic of Botswana on a regular basis and at all appropriate stages of our process."

The sale process comes just weeks after Anglo successfully spun off its platinum unit into a standalone company, Valterra Platinum AGPPF. 

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