Guest Contributor | Mar 20, 2018 | 0
Botswana says No to more De Beers
Botswana will not exercise its pre-emptive right to acquire an additional 10% stake in De Beers, the country’s Ministry of Minerals, Energy and Water Resources, said earlier this week, officially announcing the Botswana Government’s decision to withdraw from the deal.
“The Government of the Republic of Botswana (GRB) wishes to announce its decision not to take up its pre-emptive rights to acquire an additional shareholding in De Beers, following the receipt of a formal pre-emption offer from Central Holdings Limited, dated 26 July 2012” read a statement released by the Office of the President.
Under the terms of the Shareholders’ Agreement between Anglo American, CHL (representing the Oppenheimer family interests) and the Botswana Government, the latter had pre-emption rights in respect of CHL’s interest in De Beers, enabling it to increase its interest in De Beers, on a pro rata basis, to up to 25% at a cost of US$1.275 billion.
The Botswana Government said it simply does not have the money. “The US$1.275 billion represents about 10% of GDP, a large cost for a country whose government budget is still in deficit, and is trying to bring the budget to balance within a year and a half.”
“Such a purchase would, inevitably push back the restoration of balancing the budget and drain the country’s international reserves.”
The diamond industry is a major contributor to the economy of Botswana through shareholding in Debswana Diamond Company and DTC Botswana. De Beers is the world’s premier diamond company.