otswana’s President Mokgweetsi Masisi says he told negotiators of Anglo American unit De Beers to walk if they didn’t like the terms of the revised mining partnership with Africa’s largest diamond producer in tough talks that were concluded earlier this month.
The parties eventually agreed to extend their 54-year sales partnership by 10 years with De Beers, the world’s largest diamond company, getting a 25-year mining license. Botswana got 30 percent of all output and will receive half in the last year of the agreement versus 25 percent in the previous deal.
“We had to rebalance this and so I looked at them in the eye and said we are not doing this anymore. It stops here,’’ Masisi told CNBC Africa at last week’s U.S.-Africa Business Summit in the capital Gaborone. “I told them we don’t want the deal we have. We are going to have a new deal.’’
Diamond prices dropped more than 6 percent in the first half of the year, amid competition from the synthetic diamonds industry and sluggish global demand.
De Beers CEO, Al Cook, told Reuters last week the deal benefitted both parties.
President Masisi said De Beers would also contribute up to $750 million over the next decade to help fund efforts to diversify Botswana’s economy from diamonds which currently contribute20 percent of the nation’s gross domestic product and two thirds of foreign exchange earnings.
“We have committed to a knowledge economy. We have committed to create wealth using our intellectual capital. We have learnt about marketing enough. We know where the markets are. We know what the potential is, and we are going to want a part of it,’’ Masisi said. “Poor souls they didn’t have a choice. Now we are in the control seat.’’
Calling for beneficiation of Africa’s raw materials, Masisi said the continent through the Africa Continental Free Trade Agreement (AfCFTA) wanted to change the way it traded with the rest of the world and within its borders.
“Africa doesn’t want to participate as it has been traditionally known to participate by generating raw materials and exporting them raw. Africa does not want to do business like it was known to do by exporting out of Africa more than it exported among the countries in Africa,’’ he said. “We are in the business of value adding. We are in the business of intra-Africa trade and Botswana is a keen player at that. ‘’
The 54-member AfCFTA seeks to boost incomes by $450 billion by 2035, potentially pulling as many as 40 million people out of poverty. To date, 46 of the Africa Union’s (AU) 54 members have ratified it. The AU says the agreement will eliminate trade barriers and boost intra African trade by pushing trade in value added products across the continent.