The 1,758-carat Sewelô diamond, recovered from the Karowe mine in 2019. (Photo: Lucara)
The government of Botswana has announced its intention to take a 24 percent stake in a Belgian-headquartered diamond company, HB Antwerp, a move which is being touted as preparing a possible challenger to De Beers.
This is despite the fact the Botswana government hold a 15 percent share De Beers, and with the diamond conglomerate also shares ownership in Debswana, the country’s largest mining company.
Speaking at a ceremony in the capital city of Gaborone, Botswana President Mokgweetsi Masisi said thatthe country’s state gem trader will supply the Belgian firm with the precious stones for the coming five years.
HB Antwerp, which was founded only about three years ago and is today already recognized as Belgium’s largest manufacturer, has a exclusive partnership agreement with the Lucara Diamond Corporation, a Canadian mining company that wholly owns the Karowe mine, which is located in in Letlhakane, in the country’s Central District.
According to the arrangement, HB Antwerp has access to all of the +10.8 carat rough diamonds recovered from Karowe. The license mine to exploit the mine, which is a facility that was originally discovered by De Beers in 1969 and initially was thought to be small and low grade, was sold in 2009 to a subsidiary of Lucara, after became known to be one the world’s most prolific producers of very large stones.
Karowe is today considered the only mine in history to recover three rough diamonds larger than 1,000 carats, including the 1,109-carat Lesedi La Rona in 2015, the 1,758-carat Sewelô in 2019, and a 1,174.76-carat in 2021.
HB Antwerp’s partnership with Lucara has led to its purchasing the Sewelô, in a partnership with Louis Vuitton, and the 549-carat Sethunya in 2020.
Botswana President Mokgweetsi Masisi.
NEGOTIATING NEW AGREEMENT WITH DE BEERS
Botswana is still busy negotiating a new agreement with De Beers, which manages most of the the diamonds mined by the Debswana joint venture. Although many regarded it as grandstanding, Masisi threatened to walk away from the talks. Interestingly, he also praised how HB handles diamonds purchased from Lucara.
Speaking in his home village of Moshupa, Masisi said his country is well positioned to push for a better deal with De Beers. “We now know how the diamond industry operates. We used to receive 10 percent of the stake, but now, under my leadership, we are receiving 25 percent,” he said, as quoted by Voice of America.
“We are dealing with a giant. It is the first time it has been shaken like this. We want what is ours. This is our company, we want a majority stake, and we are doing so through negotiations. If the talks become difficult, we will say, no, let everyone pack and go separate ways,” te Botswana President said.
Botswana currently earns about $4.5 billion per year in sales, taxes and royalties from its contract with De Beers.
MORE TRANSPARENCY IN THE SUPPLY CHAIN
One of the issues raised by the Botswana government in relationship to its arrangement with De Beers is a lack of transparency concerning the value its rough production generates down the supply chain after it is cut and polished.
The business model that was developed by HB Antwerp and Lucara, which involves the use of what is referred to as an HB Capsule, HB Capsule, which is an Internet of Things device developed with the assistance of Microsoft, which uses blockchain technology and data analytics to track every stage of a natural diamond’s journey from the moment it is unearthed at the mine through the entire production process.
Lucara Diamond Corporation’s Kurowa mine. (Photo: Kurowa)
In September 2022, HB Antwerp an event on the sidelines of the UN General Assembly High-level Week to discuss how diamond and other natural resource-rich economies can be transformed through supply chain innovation, artificial intelligence, and blockchain technology. It was attended by President Masisi, as well as Vincent Van Quickenborne, Belgium’s Deputy Prime Minister, and Teresa Hutson, Microsoft’s Vice President of Tech and Corporate Responsibility.
“We believe there is enormous scalable potential for the profit-sharing model that Botswana and HB Antwerp are pioneering,” the Botswana President said. “The way that extractive industries interact with African governments has to fundamentally change, and Botswana is excited to be working with HB Antwerp to realize a more transparent and sustainable way of working for the global diamond supply chain. We believe that this collaboration can pave the way for greater shared economic development across the African continent.”