Botswana Seeks Increased Stake in HB Antwerp Amid Diamond Market Slump

The government of Botswana is in negotiations to increase its ownership in Belgian diamond manufacturer HB Antwerp, aiming to nearly double its stake from 24% to 49.9% at no extra cost. 

This decision follows the weakened diamond market, which has lowered HB Antwerp’s valuation and allowed Botswana to renegotiate its investment terms.

Leveraging Market Conditions for Greater Control

In his address to parliament, Botswana’s Minister of Minerals and Energy, Lefoko Moagi, confirmed the government’s intention to renegotiate the deal, originally agreed upon in March 2023. The initial agreement involved Botswana acquiring a 24% stake in HB Antwerp for 890 million pula (approximately $65.95 million). However, Moagi explained that due to changes in market conditions, the government can now obtain a 49.9% stake without committing additional funds.

“We will not be injecting more capital, but we will get more shares for the same amount proposed in 2023,” Moagi stated, signalling the strategic advantage Botswana is seeking amidst the downturn in the diamond industry. The revised stake would increase Botswana’s influence over the Antwerp-based company, which specialises in cutting and polishing large diamonds.

Strategic Partnership with HB Antwerp

Botswana’s engagement with HB Antwerp is part of a larger strategy aimed at increasing its presence and capabilities in the downstream diamond industry. The original agreement came during the country’s broader negotiations with De Beers, with which Botswana shares a decades-long diamond mining partnership through their joint venture, Debswana.

A five-year supply agreement will see Botswana’s state-owned Okavango Diamond Company (ODC) provide rough diamonds to HB Antwerp. “According to Moagi, the partnership is designed to enhance Botswana’s ability to market its diamonds outside of its traditional agreements, which have largely been tied to De Beers.

The deal is also seen as a move towards greater control over the pricing and marketing of Botswana’s diamonds. “Enabling independent price discovery for Okavango Diamond Company” was highlighted as a key benefit of the acquisition. Historically, Botswana has relied on auction methods to sell its rough stones, and this move is expected to shift the country toward more commercially sustainable sales contracts.

Technological Gains and Job Creation

Another crucial aspect of the deal is access to HB Antwerp’s cutting-edge technology. This technology, including methods for polishing large and small stones, is seen as crucial for increasing local diamond manufacturing in Botswana, rather than exporting rough stones for processing abroad.

Moagi pointed out that this move would enable more diamonds from the Debswana venture to be processed domestically, adding value to the country’s diamond industry. The acquisition is expected to create jobs in ‘higher-value’ parts of the supply chain, such as diamond pricing, cutting, and marketing, where Botswana has had limited involvement.

Implications for the Jewellery Industry

For jewellers, Botswana’s growing role in the downstream diamond market could impact how rough diamonds are sourced and priced, as the country looks to increase control over its supply chain. 

The country’s ability to influence diamond pricing through independent channels could also affect global supply trends and market pricing dynamics. HB Antwerp’s technologies may also prompt other diamond-producing nations to pursue similar downstream opportunities in diamond cutting and polishing.