8 hours agoBotswana advised to up De Beers shareholding to 26% – a blocking minority level

Allows a broader ownership coalition that can stabilize and grow De Beers Botswana is contemplating a move that could reshape its economic destiny and the global diamond industry. The government of Botswana, already a 15% owner of De Beers, the world’s most iconic diamond company, is considering expanding its stake as Anglo American, the current 85% majority owner, prepares to divest. This potential acquisition has sparked a heated debate, inside Botswana, across boardrooms in London and Johannesburg, and among analysts watching the diamond market’s uncertain future.

But the stakes go far beyond mere shareholding percentages; they touch on Botswana’s economic survival and the future of a company that once monopolized the diamond trade. De Beers, long synonymous with the sparkle and glamour of diamonds, is grappling with a financial reality far less dazzling. The company reported a staggering $189 million EBITDA loss in the first half of 2025, a sharp reversal from a $300 million profit a year earlier.

Rough diamond sales plummeted by 44% in the first quarter of 2025 compared to the previous year, and production guidance was slashed by up to 40%, reflecting weak demand and volatile market conditions. Even with a production surge out of Botswana’s Jwaneng mine in the third quarter, these gains were insufficient to offset broader challenges facing De Beers globally. The company’s core operations, primarily mining, account for about 70-75% of its value, but the entire enterprise is under pressure to reinvent itself amid shifting consumer preferences and competition from synthetic diamonds and other luxury goods sectors.

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According to Econsult Botswana, the ownership structure complicates matters further. Anglo American holds 85% of De Beers, while Botswana’s government controls the remaining 15%. Yet, through its 50% stake in Debswana, a joint venture that accounts for the bulk of De Beers’ mining production in Botswana, the government effectively commands an economic interest nearing 50%.

This dual-layered stake strengthens Botswana’s influence but also raises questions about the financial prudence of increasing direct ownership. The International Monetary Fund (IMF) has counseled caution, warning the Botswana government against leveraging its already strained fiscal resources to buy more shares amid the company’s losses and the diamond sector’s instability. The government’s strategic dilemma is clear: should it seek to buy a controlling stake, push for a blocking minority that safeguards its interests, or focus on forming a broader ownership coalition that can stabilize and grow De Beers?

Analysts, including Econsult, argue that the latter approach may hold the most promise. De Beers faces significant financial needs beyond its mining operations, including investment in Element Six, its advanced diamond technology division, and exploration ventures that account for another 20-30% of asset value. These require deep pockets and expertise in mining, marketing, and finance, a coalition of stakeholders rather than a single dominant owner might be best positioned to navigate this complexity.

Botswana’s economic context adds urgency to this decision. The country’s diamond sector has been a cornerstone of its development, generating up to 40% of government revenue and 75% of foreign exchange earnings. Yet, reliance on one commodity has left Botswana vulnerable.

The economy is forecast to shrink nearly 1% in 2025 amid the diamond downturn, underscoring the need for diversification. Botswana has embarked on ambitious plans to reduce its diamond dependency, investing heavily in education, infrastructure, and alternative sectors. Still, the diamond industry remains vital, and the government’s current effective 50% economic interest in De Beers and Debswana underlines its deep entanglement with the sector.

At the heart of the debate is the goal of reviving De Beers, not just as a mining company but as a resilient, innovative enterprise ready for the demands of the 21st-century luxury market. This means addressing production inefficiencies, adapting to changing consumer tastes, and embracing technological advances that challenge the natural diamond’s supremacy. Econsult says Botswana, with its unique position as both a resource-rich nation and a shareholder, wields considerable influence but also faces limits.

Borrowing heavily to acquire more shares risks fiscal instability; relying solely on state funds could divert resources from vital diversification efforts. The broader diamond industry landscape also complicates the picture. De Beers no longer monopolizes the market as it once did.

Competitors and synthetic diamond producers have chipped away at its dominance, forcing the company to shift from controlling supply to competing on branding, innovation, and consumer engagement. The company’s retail arm, once partly owned by LVMH, is now fully under De Beers’ control, signaling a strategic pivot toward luxury branding. Yet, this transformation requires sustained investment and strategic partnerships.

Moreover, the sale process itself reflects the complexities. Anglo American prefers a direct sale rather than a public offering, seeking buyers who can commit long-term to the company’s revival. Botswana has the right of first refusal, but it remains unclear if it aims to acquire a controlling stake or simply increase its shareholding to a blocking minority level around 26%.

The government’s decision will need to balance asserting control and managing risks while fostering a viable coalition that includes industry experts and financial backers. De Beers’ future hinges on this delicate balance of ownership, strategy, and market forces. Botswana’s role is pivotal, it has the opportunity to shape an ownership structure that can revive De Beers while protecting its national interests.

Yet, the government must navigate economic constraints carefully, avoiding the pitfalls of overexposure to a volatile diamond market. The IMF’s advice underscores the need for fiscal prudence and economic diversification, even as Botswana seeks to safeguard its most valuable asset. Botswana’s decision on De Beers shares will echo beyond the borders of this southern African nation.

It will affect the global diamond supply chain, influence luxury markets worldwide, and signal how resource-rich nations can leverage ownership stakes in multinational enterprises to secure their economic futures. Whether Botswana chooses to deepen its involvement or foster a broader coalition, the path it takes will be a defining chapter in the story of diamonds, and of a country striving to balance heritage, wealth, and resilience in a changing world.

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