Botswana seeks control of De Beers

[Ben Graham]

Botswana is pushing to take a controlling stake in De Beers as Anglo American (LON: AAL) prepares to divest from the diamond company.

The country’s mining minister Bogolo Kenewendo told the Financial Times on Wednesday that President Duma Boko “remains resolute in his quest to increase Botswana’s stake in De Beers to ensure Botswana’s full control over this strategic national asset and the entire value chain including marketing”.

The comments come ahead of an early August deadline for bids to be submitted to Anglo from potential buyers of the diamonds business.

Kenewendo said any sale of the company “without our support will be difficult to achieve”.

“Our partners at Anglo American have, regrettably, failed to manage the process transparently or in co-ordination with the government and with our support,” she added.

De Beers, the world’s leading diamond producer by value, has been on the chopping block since May 2024, when Anglo announced plans to either sell the unit or launch an initial public offering (IPO). This decision came as part of a corporate overhaul triggered by Anglo’s successful defence against a £39 billion ($49 billion) takeover bid by Australian rival BHP (ASX: BHP).

The miner sources about 70% of its diamonds from the country.

The country’s bold move comes despite a widening budget deficit, expected to hit 7.5% by 2026, and analysts’ skepticism over its ability to raise sufficient funds. Kenewendo, however, insisted that “financing is not an issue.”

Shares of Anglo American rose 0.69% to £2,355.00 ($3,193.43) on Wednesday, valuing the company at approximately £25.16 billion ($34.12 billion).

Strategic asset, market slump

The developments pose a major challenge to Anglo’s “dual-track” strategy of either selling or publicly listing its 85% De Beers stake.

De Beers has struggled amid falling demand from China and growing competition from lab-grown stones. Anglo has twice cut De Beers’ valuation, most recently to $4.1 billion in February. The miner also reported a 44% revenue drop in the first quarter and is holding $2 billion in unsold diamonds.

Anglo said it remains in regular talks with Botswana and acknowledged the country’s role as a key partner.