BOTSWANA has made a significant move to add more value to its diamond industry by acquiring a 24 percent stake in Belgian diamond company HB Antwerp. The investment is worth ‘hundreds of millions’ of dollars and will help the company open a new facility in Botswana, employing around 350 people by 2026.
Botswana’s Minister of Minerals, Lefoko Moagi, said, ‘Diamonds remain the mainstay of our economy, and indications are that they will remain so for the foreseeable future.’ The diamond sector accounts for about 20 percent of Botswana’s GDP and more than 90 percent of its foreign export earnings, as well as just over 30 percent of government revenue.
Botswana’s government is also interested in transparency within the diamond industry and will use HB’s proprietary digital platform to trace diamonds from source to the consumer. HB Antwerp’s co-founder, Rafael Papismedov, said, ‘As disruptors we say don’t trust, verify.’
The acquisition is an ambitious attempt by an African country to move beyond just extracting minerals and to add more value. Botswana is already well-established within the global diamond supply chain, owning a 15 percent stake in De Beers and having a joint venture with the world’s second-largest diamond manufacturer.
Botswana’s President, Mok
gweetsi Masisi, has suggested he is willing to upend a decades-long diamond mining arrangement with De Beers unless the i
ndustry giant improves its terms. The current 10-year licence deal, which ends in June, entitles Botswana to buy up to 25 percent of the diamonds mined in their joint venture, Debswana. Industry insiders speculate that Botswana wants to push for closer to a 50-50 split. Botswana earns around $4.5bn per year in sales, taxes, and royalties from its partnership with De Beers.
Analysts say that while the HB Antwerp deal is exciting and progressive for the African diamond industry, it’s a relatively small deal in real terms. Diamond industry analyst Paul Zimnisky sees some elements of the HB Antwerp deal as ‘posturing’ by Botswana to help push for a better deal with De Beers.
Zimnisky however agrees that Botswana is serious about improving transparency and moving down the value chain, like more African countries are trying to do. Zimbabwe, DR Congo, and Zambia have all talked in recent months about more downstream processing taking place in their countries, or even producing electric vehicle batteries themselves in Africa.
However, India still controls about 95 percent of the rough diamond processing market. Diamond analyst Edahn Golan has warned that at some point, more lab-grown diamonds will be sold than natural ones. With the diamond industry dominated by De Beers and Russia’s Alrosa, smaller industry players have had to consider merging.
