Friday, June 21, 2024

The Diamond Deal: A Tale of Commitment and Change

President Mokgweetsi Masisi of Botswana embarked on a pivotal journey to Las Vegas, USA, to attend the prestigious annual JCK jewelry show. His mission was clear: to reassure diamond markets and partners of Botswana’s unwavering commitment to its longstanding partnership with Anglo American and De Beers Mining Group.

Before his departure, Masisi addressed journalists in Gaborone, underscoring the importance of his trip. “We have an agreement that we need to finalize. It is crucial to express confidence to the market, which is why I am going,” he said.

The JCK Show, held from Friday, May 31, to Monday, June 3, at the Venetian Resort in Las Vegas, serves as a premier event for the global jewelry trade community. It provides a platform for business growth through networking and transactions.

Al Cook, CEO of De Beers Group, also shared plans for the future. “Later this month, we will present the new strategy for De Beers,” Cook confirmed, though he offered few details. He emphasized the enduring global demand for diamonds and noted that the new strategy aligns with Anglo American’s significant restructuring efforts. Anglo American, De Beers’ parent company, plans to spin off its platinum-metals subsidiary, divest its diamond unit, sell its steelmaking coal assets, and explore options for its nickel operations.

Cook suggested that Anglo American’s divestment could open new opportunities for De Beers under potential new ownership. “But some things will not change. We will continue to deliver value for all our stakeholders, including our partners in Botswana, South Africa, Namibia, Canada, Angola, and other countries. In particular, we look forward to finalizing our transformational agreement with the Government of the Republic of Botswana, which holds a 15 percent ownership interest in De Beers,” Cook stated.

In 2023, De Beers faced significant challenges, including a $1.6 billion write-down of its book value due to decreased asset value and future earning potential. Total revenue dropped to $4.3 billion from $6.6 billion in 2022, with rough diamond sales nearly halving to $3.6 billion from $6 billion the previous year. Sales volumes of rough diamonds fell by 19 percent to 24.7 million carats, down from 30.4 million carats in 2022, and the average realized price per carat decreased by 25 percent to $147, compared to $197 in 2022.

Despite these challenges, President Masisi remained steadfast. In an interview with CNBC Africa, he reaffirmed Botswana’s intention to retain its stake in De Beers. “The value of De Beers is fundamentally created by Botswana. Without Botswana, De Beers doesn’t exist. That can never be missed by anybody,” he asserted.

Anglo American has firmly rejected a third unsolicited takeover proposal from BHP Group Limited, citing significant concerns over the proposal’s complexity and potential risks. 

Meanwhile to allow for continued discussions on mitigating these risks, Anglo American says it has extended the “Put Up or Shut Up” deadline to May 29, 2024. This extension provides additional time for BHP to either formalize its offer or announce that it does not intend to proceed.

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