Botswana will Double De Beers Stake to 30%

(IDEX Online) - Botswana is to double its holding in De Beers to 30%, becoming its largest single shareholder under a proposed takeover by a consortium led by former CEO Gareth Penny.

President Duma Boko announced the decision on November 9 in his State of the Nation address to parliament in Gaborone, confirming that his government had selected the Global Diamond Consortium (GDC) as its preferred bidder for Anglo American's 85% interest in the diamond group.

Namibia and Angola, both diamond-producing countries with De Beers mining operations, will also participate in the proposed ownership structure. The government of Oman is also involved, according to Penny.

Boko said the increased holding would give Botswana greater influence over the company's strategic direction, reflecting its importance as De Beers' biggest producing country. Around 70% of the group's diamonds are sourced in Botswana.

"For the first time, the great diamond-producing nations of our region will sit together at the ownership table of the company that markets their diamonds," he told lawmakers.

He added that the investment was intended to ensure that the region's mineral resources generated greater local prosperity.

The selection of GDC follows more than two years of efforts by Anglo American to sell De Beers as part of a restructuring designed to concentrate on copper and premium iron ore.

The consortium is an alliance of diamond industry figures and companies, with Penny at its head. Its reported participants include Antwerp-based manufacturers Diarough and Pluczenik, US jewelry retailer Signet and Swiss luxury group Richemont, owner of Cartier. Moshe Klein of Grandview Klein is also among the industry figures associated with the group.

Penny, who was De Beers CEO from 2006 to 2010, said Botswana's backing was a significant endorsement of the consortium's plans.

"Together, we believe we can create a new chapter for this iconic business, one defined by strategic clarity between producing countries and the wider value chain, stronger consumer connection and sustained growth in demand for natural diamonds," he said.

He added that the consortium was focused on finalizing agreements with Anglo American as soon as possible.

The financial terms have not been formally disclosed. The Financial Times has reported that the transaction could value De Beers at around $1bn, although this has not been confirmed by the parties.

De Beers CEO Al Cook welcomed Botswana's intention to increase its investment.

"I am delighted that the country now intends to increase its position in our iconic business," he said in a statement. "We welcome owners that share both deep experience of diamonds and high ambitions for what we can achieve."