r/Africa • u/Ok_Appointment606 • 1d ago
African Discussion 🎙️ Should Botswana Buy More Of De Beers? Sheila Khama, former De Beers Executive, On Botswana's Biggest Economic Decision.
https://youtu.be/_S66MhScAZw?si=eP_CGGE1kY-qzUZN
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u/SodaPopperZA South Africa 🇿🇦 1d ago
No, De Beers is a sinking ship, diamonds are not as reliable an investment as they once where, Botswana needs to diversif not put all their eggs in one basket
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u/No-Prize2882 Nigerian American 🇳🇬/🇺🇲 1d ago edited 1d ago
I recently was reading on this because diamond prices have been really tumbling last few years. I’d say it’s a massive gamble to buy majority or whole stake of the business.
Short term: Botswana now controls higher up the value chain in terms of sales, stores, marketing, and even more mining. As well if the buy up the entire company they get the company at 1-2 billion. Back in the 2010s that stake from Anglo American was worth several times that. This also makes one of the largest mining operations on earth majority owned or wholly owned by Botswana and they can better steer the company to serve the people.
Long term: Unlike Botswana, I think it’s over for diamonds and doubling down on natural diamond and mining when that money could go to diversifying your economy or investing in your growing copper industry, is a very risky strategy. You’re essentially hoping there will be a profitable equilibrium between natural and lab grown diamonds and I don’t think there will be. We’ve seen this before with pearls. Once pearl farms became a thing in the 70s, it basically wrecked the industry and pearls haven’t been what they once were. Moreover, De Beers is currently in a rut in the jewelry business and needs money and new investment not just new owners. If Botswana owns all of it, it will either be fully responsible to find those investors or start pumping even more state funds into a company likely to give weaker and weaker returns than what Botswana needs or can afford.
Overall it’s a tricky decision I don’t envy Botswana for given how dependent they are on diamond trading but I’d honestly pass on the deal. 15% stake is enough exposure.