De Beers and Botswana: A New Diamond Deal Reshapes a 50-Year Partnership
The partnership between Botswana and De Beers is one of the most consequential and closely watched relationships in the global mining industry. For over 50 years, the 50-50 joint venture Debswana — between the Government of Botswana and De Beers — has been the engine of Botswana's economy, producing approximately 23 million carats of diamonds annually from four mines: Orapa, Letlhakane, Jwaneng, and Damtshaa. Diamond mining accounts for approximately 80 percent of Botswana's export earnings, one-third of GDP, and one-fifth of government revenue.
The relationship, while enormously profitable for both parties, has been periodically strained by Botswana's desire for greater control over its mineral resources and a larger share of the value chain. In 2024, the government secured a landmark renegotiation of its sales agreement with De Beers, increasing the share of diamonds allocated to the state-owned Okavango Diamond Company from 25 percent to 40 percent. The new agreement, which took effect on January 1, 2026, represents the most significant rebalancing of the partnership since its creation in 1969.
The deal has profound implications for Botswana's economic future, the global diamond market, and the broader conversation about resource sovereignty in Africa.
The Terms of the New Deal
The new 10-year sales agreement, concluded after more than two years of negotiation, encompasses several key changes to the existing arrangement:
First, the allocation of Debswana's rough diamond production to the Okavango Diamond Company has increased from 25 percent to 40 percent, with De Beers retaining the remaining 60 percent for sale through its London-based sight system. This means that approximately 9.2 million carats of Botswana's annual production — valued at approximately $2 billion at current market prices — will now be sold directly by ODC rather than through De Beers.
Second, the royalty rate paid by Debswana to the Government of Botswana has been increased from 10 percent to 12 percent of the value of diamonds produced. The increase, which applies to all four Debswana mines, is expected to generate an additional $300 million in annual government revenue.
Third, the agreement establishes a framework for greater value addition in Botswana, including commitments by De Beers to increase diamond sorting and aggregation activities in Gaborone and to support the development of a local diamond cutting and polishing industry.
Fourth, the agreement includes a "floor price" mechanism that guarantees Botswana a minimum price for its diamonds during periods of market weakness, providing a degree of revenue stability that was absent from the previous arrangement.
The total value of the new deal to Botswana, when the increased allocations, higher royalties, and value addition commitments are combined, is estimated at an additional $2.5 billion over the 10-year term — a significant sum for a country with a population of approximately 2.4 million.
The Negotiation Dynamics
The negotiation was led on Botswana's side by President Mokgweetsi Masisi and Minerals Minister Bogolo Kenewendo, and on De Beers' side by CEO Al Cook. The talks were described by participants as "tough but constructive," with Botswana leveraging its position as the world's largest diamond producer by value to extract concessions from De Beers.
Botswana's negotiating position was strengthened by several factors. The global diamond market has been in a state of structural flux, with lab-grown diamonds capturing an increasing share of the market (approximately 20 percent by value in 2025, up from 5 percent in 2020) and demand for natural diamonds softening in key markets including China and the United States. De Beers, facing pressure on both its revenue and its market share, could ill afford to lose its most important production partnership.
The diversification of Botswana's diamond sales channels also gave the government leverage. The Okavango Diamond Company has developed its own client base of diamond buyers and manufacturers, demonstrating that Botswana can market its diamonds independently of De Beers. ODC's sales reached approximately $1.5 billion in 2025, its highest level since inception, and the company has built relationships with buyers in India, Israel, Belgium, and China.
"Masisi played his hand brilliantly," said Dr. Keith Jefferis, a former Deputy Governor of the Bank of Botswana. "He made it clear that Botswana was prepared to walk away from the deal if the terms were not improved. That credibility came from the demonstrated capability of ODC and from the broader strategic vision of a Botswana that controls more of its resources."
The Global Diamond Market Context
The new agreement comes at a challenging time for the global diamond industry. The market is adjusting to several structural shifts: the growth of lab-grown diamonds, which are chemically identical to natural diamonds but can be produced at a fraction of the cost; the changing preferences of younger consumers, who are less attached to the traditional symbolism of diamond jewellery; and the increasing scrutiny of diamond supply chains for environmental and human rights compliance.
De Beers' revenue declined by approximately 12 percent in 2025, reflecting the market headwinds. The company has responded by reducing its rough diamond prices, cutting operating costs, and increasing its investment in the marketing of natural diamonds as a luxury, heritage product distinct from lab-grown alternatives.
Botswana's diamonds, which are predominantly gem-quality stones from the Jwaneng and Orapa mines — two of the world's most valuable diamond mines by value per tonne — have been relatively insulated from the market downturn. The country's production mix, which skews toward larger, higher-value stones, commands premium prices that have held up better than the broader market.
Value Addition and the Cutting and Polishing Industry
One of the most significant elements of the new deal is the commitment to increase value addition in Botswana. The country has long aspired to develop a domestic diamond cutting and polishing industry that would capture more of the value chain — converting rough diamonds into polished stones domestically rather than exporting them for processing elsewhere.
The current cutting and polishing industry in Botswana is modest, with approximately 15 factories employing approximately 3,500 workers. The factories, operated by companies including Lazare Kaplan, Diacore, Eurostar, and Shrenuj, process approximately 2.5 million carats of rough diamonds annually — a fraction of the country's total production.
The new agreement includes commitments by De Beers to supply an additional 1.5 million carats of rough diamonds per year to the local cutting and polishing industry, with preferential allocation of stones that are well-suited to local processing. The government, for its part, has introduced fiscal incentives for cutting and polishing operations, including a reduced corporate tax rate of 15 percent (compared to the standard 22 percent) and duty-free import of diamond processing equipment.
The expansion of the cutting and polishing industry faces challenges, including the shortage of skilled labour, the high cost of electricity in Botswana relative to competing centres such as India and Thailand, and the logistical complexity of operating an export-oriented industry from a landlocked country. The government has established a diamond cutting and polishing training academy in Gaborone, in partnership with the Indian Gemological Institute, to address the skills gap.
The Karowe Mine Exception
The new agreement between Botswana and De Beers does not cover the Karowe mine, operated by the Canadian company Lucara Diamond Corporation. Karowe, which is known for producing large, exceptional diamonds — including the 1,109-carat Lesedi La Rona, which sold for $53 million in 2017 — has been a significant contributor to Botswana's diamond revenues.
Lucara has been in discussions with the government about renewing its mining licence, which expires in 2029, and the company has proposed an underground expansion of the Karowe mine that would extend its productive life to approximately 2040. The government has indicated that any licence renewal will be conditional on increased royalties and greater local procurement.
The Karowe negotiations highlight Botswana's broader strategy of extracting greater value from all diamond mining operations within its borders, not just Debswana. The government has established a Minerals Development Policy that sets out a framework for maximising the economic contribution of the mining sector, including requirements for local content, beneficiation, and fiscal transparency.
The Beyond-Diamond Future
The new diamond deal, while significant, underscores the urgency of Botswana's economic diversification agenda. Despite five decades of diamond wealth, Botswana's economy remains heavily dependent on a single commodity, making it vulnerable to price fluctuations and demand shifts that are beyond the government's control.
The government's Vision 2036 development strategy identifies tourism, financial services, agriculture, and technology as priority sectors for diversification. The establishment of the Botswana International Financial Services Centre, which offers tax incentives and regulatory advantages for international companies, has attracted approximately $5 billion in assets under management since its launch. The tourism sector, anchored by the Okavango Delta and Chobe National Park, has recovered to pre-pandemic levels, with visitor arrivals reaching 1.8 million in 2025.
Yet diamonds remain the foundation, and the new deal with De Beers ensures that foundation will generate significantly more revenue for Botswana in the decade ahead. The challenge is to use that revenue wisely — investing in diversification, infrastructure, and human capital so that the next generation of Batswana inherits an economy that is more resilient, more diversified, and less dependent on the stones that lie beneath the Kalahari sand.
As President Masisi said during the signing ceremony: "This deal is not just about diamonds. It is about the future of our country. We are taking control of our resources, and with that control comes the responsibility to build a Botswana that works for all its people."