For industry veterans watching the unfolding drama between De Beers and the government of Botswana, the current situation can surely be regarded as little short of astonishing. For more than half a century the global diamond trade has seen the all-powerful multinational diamond giant paired with the diamond-rich southern African country largely to the benefit of De Beers. But that story is about to be rewritten.
Due to a lengthy market slump and the corporate restructuring of its parent company, De Beers is no longer the dominant diamond player. Indeed, De Beers position has been on a steady downward slide for the past 20 years. Botswana recognized this in 2014 with a new diamond supply deal that forced De Beers to move its imperial-style headquarters from central London to the Botswanan capital, Gaborone. Now, De Beers is facing the prospect of majority control by the very nation upon which its existence depends.
Anglo American’s forced exit gives Botswana a foot in the door
The window of opportunity for Gaborone was opened by the financial troubles and broad restructuring plan of Anglo American. Ever since May 2024, when Anglo fended off a $49 billion takeover bid from Australian mining rival BHP, De Beers has been placed firmly on the chopping block, either to be sold or facing an initial public offering (IPO).
The proposed merger between Anglo American and Teck Resources of Canada, which would result in a new $50 billion entity focusing on copper and iron ore, essentially signals the end of diamonds as a strategic priority for the miner. The reason for the sale is adverse market conditions which have helped strengthen Botswana's position.
The ever-increasing demand for cheaper lab-grown diamonds has deeply hurt the natural diamond market. So much so that Anglo American has been forced to twice cut De Beers’ valuation, most recently to $4.1 billion in February.
In the first half of this year, De Beers suffered a sharp $189 million loss compared with a $300 million profit in the year-earlier. Revenues dropped by 10% to just $2 billion. With the sharks circling, the former market giant is now seen as a distressed asset. As a consequence, Botswana sees an acquisition of a controlling interest not only possible but strategically critical.
Botswana seeks ‘economic sovereignty’
The government of Botswana has been unambiguous in its intentions, stating that securing a controlling stake (above 50%) in De Beers is now a matter of "economic sovereignty." President Duma Boko has taken an aggressive stand, aiming to finalize the transaction by the end of October.
This move is not merely about increasing a stake; it is about reversing the historical power dynamic, as De Beers sources about 70% of its rough diamonds from Botswana.
Boko’s rhetoric has become increasingly sharp, reflecting growing national indignation over the current market slump. In a blunt assessment, the President complained in July that the country was "broke" because De Beers was "not doing its job" of selling at high prices. "Maybe we should take over and sell them ourselves."
This level of direct nationalistic confrontation is unprecedented, placing immense pressure on Anglo American to sell to the Gaborone government. To finance the acquisition, Botswana has hired Lazard as an adviser and entered into discussions with partners, including Oman’s sovereign wealth fund, and securing a substantial $12 billion investment pledge from Qatar.
The combination of domestic political will, essential resource supply, and international financial backing places Botswana in an unassailable negotiating position. As Mining Minister Bogolo Kenewendo highlighted, Anglo American's failure to manage the sale transparently or with the necessary government support only strengthens Gaborone’s hand; no external buyer will dare sign a deal without Botswana’s approval for fear of resource nationalism leading to the revocation of licenses and asset seizures.
The adverse market and immediate challenges
The necessity for Botswana to gain control is underscored by the current economic fragility. Diamonds account for a staggering 80% of the country’s exports and approximately one third of total government revenues. The fall in rough diamond prices since the 2022 peak has severely damaged Botswana’s economy, leading to a large budget deficit despite the nation’s historically wise use of resource wealth to achieve stability and prosperity.
This market weakness, driven by an economic slowdown, poor job markets, and a lack of demand from the critical Chinese market, was brought into even sharper focus by events at the Okavango Diamond Company (ODC), Botswana's state diamond trader. The ODC, which is currently allocated 30% of rough diamonds from the Debswana [Botswana-De Beers] joint venture, recently held an ad-hoc tender of about 1 million carats to raise revenue.
However, in a stark sign of the current slump, none of the stones sold, as they failed to meet their reserve prices. ODC refused to sell at rates that would have a "negative impact on the market," demonstrating both Botswana's financial strain and its firm commitment to stabilizing prices—a function historically dominated by De Beers.
The quest for value chain ascent and the hard reality
The ultimate goal, as stated by President Boko, is not merely to sell more rough diamonds, but to achieve true value addition by moving up the chain: "For too long, our diamonds have left our soil raw, and returned to us as polished stones… That era must end."
The bulk of global market value lies in the final polished jewelry, which is an area where De Beers’ performance has been poor – to say the least, despite CEO Al Cook’s talk of "creating the world’s greatest jewellery maison" through its branded boutiques. While De Beers still controls about a third of the global rough diamond business, in the diamond jewelry sphere it has been singularly unable to add value to its overall brand.
Designing jewelry is a highly specialized area. Diamonds must be cut, polished, and set in finished jewelry and this requires an entirely different skillset from mining the stones. It is a highly competitive and specialized industry.
Just as De Beers struggled in this area, Botswana is also likely to run into the same challenges. It is a sovereign country and not an industrial company. It cannot instantly become a luxury jewelry firm such as Van Cleef & Arpels or Tiffany & Co. Consequently, the acquisition of De Beers is a high-stakes strategy that risks concentrating the national economy even further, rather than achieving necessary economic diversification from diamond mining to high end jewelry creation and production.
Final words: a new era defined by leverage
For decades, the partnership between the diamond giant and the African country, formed shortly after Botswana’s independence in 1966, was characterized by De Beers' market dominance. The current circumstances, with Anglo American’s strategic retreat and the rise of the lab-grown threat, have turned this relationship on its head. Clearly, it had become two strained to continue under the old terms.
There is no doubt that Botswana holds the upper hand, for no sale can be completed without its explicit approval. This situation forces a choice upon Gaborone: use this opportunity to fundamentally reshape the value distribution of its precious and critical national resource through ownership, or use its leverage to force a transparent sale to a third party while focusing on economic diversification.
Whatever the outcome, the era of De Beers’ unchallenged dominance over the world's most valuable diamonds is over, giving way to a new chapter defined by Botswana’s assertiveness and the struggle for genuine economic sovereignty.
Abraham Dayan for Rough&Polished from Tel Aviv
