PREVIEW
Rival contenders in the diamond industry are challenging Gaborone’s resource nationalism
When President Duma Boko announced in New York on 22 September that his government was preparing to take a majority stake in the De Beers diamond conglomerate by the end of October, he added another layer of complexity to the battle to win control of the company as its biggest investor, Anglo American, tries to sell.
Officials at Anglo American, which has 85% of the equity in De Beers, say they received eight bids for the conglomerate by the end of August and would be evaluating the offers. De Beers has a book value of US$4.5 billion but industry officials expect the selling price to be much lower. Anglo officials didn’t comment on the position of Botswana, which has 15% of De Beers’s equity, but relations between the two deteriorated sharply in July when Boko accused the company of mishandling the marketing of Botswana’s diamonds.
Without referring to the Anglo American-led sales process, Boko told Bloomberg News that he was working with the Omani Investment Authority on a plan to take a controlling stake in De Beers. But a senior official at the Ministry of Mines in Gaborone claimed to be ‘in the dark’ about the transaction.
Industry sources say that Boko has been running Botswana’s strategy on the De Beers purchase without fully consulting Vice-President and Finance Minister Ndaba Gaolathe and Minerals and Energy Minister Bogolo Kenewendo.
Angola’s state-owned diamond company Endiama accentuated such concerns when it said on 24 September it had submitted a fully financed bid for a strategic stake in De Beers but did not seek majority control. Without mentioning Boko’s claims about Omani backing, Angola’s Minister for Mining and Oil Diamantino Pedro said that Luanda’s bid was to foster a ‘meaningful partnership’ between Angola, Botswana, Namibia and South Africa – one in which no party would dominate.
Pedro added that Angola’s aim was to ensure that De Beers continued to operate as an ‘independent, globally competitive enterprise’. Angola’s diamond production exceeded Botswana’s last year, making it the biggest producer in Africa for the first time in two decades.
Cloudy diamonds
Boko faces mounting pressures after sweeping to power last November, pledging a higher minimum wage and increased student allowances (AC Vol 65 No 23, Boko wins big). His flagship promises have stalled amid a downturn in the diamond market – the bedrock of Botswana’s wealth.
He wants to rebuild Botswana’s fortunes by taking control of De Beers (AC Vol 65 No 12, Pitching for De Beers). Initially Boko’s recovery plan appeared to be based on a $12bn investment deal with Qatar’s Al Mansour Holdings, signed on 21 August in Gaborone (Dispatches 25/8/25,Qatari cash could help Boko’s De Beers bid). The agreement – with the state-owned Botswana Development Corporation – targets infrastructure, energy, mining, diamond refinement, agriculture, tourism, cybersecurity and defence. But Mansour made no specific pledge on a De Beers stake.
It is a turning point for Botswana’s economic model – built on a 50/50 partnership with De Beers through the Debswana joint venture – underpinning decades of stability, infrastructure development and relative prosperity (AC Vol 66 No 6, Boko’s team hikes spending but diamond market falters). But the post-pandemic landscape has been punishing. A sluggish global economy, the rise of lab-grown diamonds and geopolitical trade disruptions have created a supply glut and depressed prices. Botswana is heading for a second consecutive recession after contracting by 3% last year. The 2025/26 budget deficit is forecast at 7.6% of GDP – down from this year’s projected 9%.
Pressed by the fiscal crisis, which has disrupted basic services including medicine provision, Boko is frustrated by falling diamond revenues. De Beers paused operations at its Botswana mines two months ago to stabilise prices by curbing production at the site that supplies 70% of its rough diamonds. It has since been selling from stockpiles to manage high inventory levels.
The closure has hit government revenues, which depend on sales from Debswana through the Diamond Trading Company Botswana and the state-owned Okavango Diamond Company. The impact has been severe – the government failed to pay workers on a poverty relief scheme, and Boko declared a national health emergency on 25 August as clinics ran out of medicine.
To compound matters, De Beers posted a first-half loss, meaning Botswana – which holds a 15% stake – will receive no dividend. The government is banking on the Al Mansour investment to ease the economic gloom.
While in Lesotho in July, Boko publicly lambasted De Beers, threatening to take control after expressing frustration with what his government views as a lack of transparency in the sales process.
Taking a position reminiscent of former President Mokgweetsi Masisi, Boko said: ‘… the country needs the money, and it has the diamonds, and somebody who is supposed to be selling the diamonds is not doing the job. We will take the diamonds and see what we can do with them. They are ours. These diamonds are ours. And so, before the end of this year, something very drastic in that space will happen. If it doesn’t happen, we will die trying.’
Broken promises
The crisis is not only economic. Boko’s failure to deliver on student allowances andwage increases has triggered public frustration. Students, unions representing low-wage workers and opposition parties have grown increasingly vocal. A student protest application was declined by police, while a union march proceeded peacefully in July. Boko’s administration, elected on a mandate for change, now risks being defined by its inability to enact reforms amid forces beyond its control. The domestic honeymoon is over – replaced by the realities of governing through a commodity bust.
Anglo American’s divestment from De Beers is a turning point for Botswana’s economic sovereignty. Kenewendo says the government wants to increase its stake to gain full control over the asset and its entire value chain, including marketing.
On 31 July, Anglo CEO Duncan Wanblad confirmed Botswana would not be offered a discount for an increased stake despite its pre-emptive rights. It would need to match third-party offers.
Botswana, Anglo American and De Beers have remained tight-lipped. Wanblad said a shortlist of purchasers had been compiled. He added that the successful bidder must have a deep association with the industry, and the sale would likely require a consortium, rather than a single buyer.
Old faces
Two former De Beers CEOs are lining up bids. Gareth Penny, chair of the investment manager Ninety One, and Bruce Cleaver, chair of Gemfields and former De Beers chief executive, are among the top contenders, as is Australian mining veteran Michael O’Keeffe. The credentials of Penny and Cleaver, former colleagues at the top management at De Beers but with good political connections in Southern Africa, would favour them as leaders in new De Beers ownership arrangement.
We hear that several Gulf funds including Al Mirqab Capital in Qatar, the Omani Investment Authority and investors based in the United Arab Emirates, have been talking to Penny and Cleaver.
Other contenders include commodities billionaire Anil Agarwal and Indian diamond firms KGK Group and Kapu Gems, though reports suggest they are not seen as frontrunners.
Anglo’s exit from De Beers will shake up the diamond mining industry in the region and internationally. Hailed by Boko, the Omani Investment Authority took over Russia’s Alrosa operations in Angola last year and is building up its role in the region’s mining sector.
De Beers recently announced its first new kimberlite discovery in more than 30 years, at an Angolan site operated through its joint venture with state-owned miner Endiama. If the De Beers sale is managed well, it could open a bright future for a regional diamond mining conglomerate with financial depth from Gulf investors and access to the elite luxury market. But if Anglo American and Botswana fail to reach agreement on new investors, it could further damage the diamond industry already hit by market difficulties
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