Botswana, a pivotal player in the global diamond industry, has declared its intention to safeguard its interests in the potential acquisition of Anglo American by BHP Group. The proposed deal, which values Anglo at approximately $39 billion, could have significant implications for Botswana due to its 15% stake in De Beers, which Anglo American primarily owns.
Botswana’s President, Mokgweetsi Masisi, emphasized the nation’s resolve to protect its assets during an interview with CNBC Africa in Dallas, Texas. The president’s firm stance underscores Botswana’s crucial role in the diamond sector, particularly as De Beers mines over three-quarters of its diamonds in the country. Botswana is not only the world’s largest producer of rough diamonds by value but also heavily relies on this sector, with revenues from diamonds forming a significant portion of the nation’s budget receipts.
Under the proposed deal, BHP aims to re-enter the diamond market by acquiring Anglo American and subsequently reviewing strategic options for De Beers. Anglo has already been considering the future of its units, including De Beers, in light of the broader industry challenges. BHP’s proposal involves Anglo spinning off its Johannesburg-listed platinum and iron-ore units before BHP takes over the remaining assets, including De Beers.
The acquisition is expected to face rigorous scrutiny from antitrust authorities across various jurisdictions, including China, South Africa, and Japan. The deal has the potential to position BHP as the world’s largest copper producer but also presents a complex challenge in navigating global regulatory landscapes and addressing concerns from various stakeholders, including national governments and industry regulators.
President Masisi’s recent remarks have highlighted the significant economic stakes that Botswana has in the De Beers deal. He emphasized that the value of De Beers is essentially created by Botswana, underscoring the country’s crucial role in the diamond market. Anglo American’s economic contributions to Botswana were substantial, amounting to $1.16 billion last year, with nearly half of that coming from taxes and royalties. The negotiations last year, which resulted in De Beers agreeing to hand over more diamonds to Botswana’s government, highlight the critical nature of these partnerships.
The diamond industry has been recovering after a challenging period that saw major players like De Beers and Russia’s Alrosa PJSC significantly reduce supplies to stabilize prices. The potential restructuring within the industry through this deal could redefine market dynamics and influence future diamond supply and pricing strategies.
Given the strategic importance of the diamond industry to Botswana’s economy, the government is set to take decisive actions to ensure that the proposed acquisition does not undermine its interests. The statement by President Masisi that Botswana will not allow itself to be made redundant or irrelevant reflects a proactive approach to international business dealings that affect national interests.
As the situation unfolds, Botswana’s involvement and its assertive stance will be crucial in shaping the outcome of the proposed BHP-Anglo deal. The global diamond industry, along with international regulatory bodies, will closely watch the developments, which are poised to have far-reaching implications for market structures and geopolitical economic relationships in the resource-rich southern African region. The preservation of Botswana’s interests in this deal is not just about protecting economic stakes but also about maintaining sovereignty over its natural resources.
Source: Mining Weekly
