🎩 Hats off to Botswana! The people just threw a lifeline to a diamond industry in serious trouble. But can De Beers actually use it, or will they sink under the weight of outdated deals and falling margins?
A Diamond Empire in Decline
Once upon a time, "A Diamond Is Forever" was the most iconic slogan in luxury. But today, the diamond industry is falling behind fast.
- Global GDP has grown 160% in 20 years
- Luxury sales are booming
- Diamond jewelry? Barely up 1.3%, and that’s before inflation
- Adjusted for inflation, polished diamond prices are 50% lower than in 2003
What went wrong? Weak storytelling. Oversupply. Lab-grown competition. And a failure to adapt.
Botswana’s Bold Move
Botswana has long been De Beers’ most crucial partner through their joint venture Debswana.
But the math doesn’t add up anymore:
- De Beers pays half the costs
- But only gets 19.2% of the profits
- And when diamond prices fall? De Beers takes 100% of the hit
Then came the now-infamous "deal" under former President Masisi:
- Botswana would reduce De Beers’ access to rough diamonds to just 50%
- Demand $75 million upfront for a new development fund
- Possibly $750 million in total obligations
- Lower fees, tighter margins, and no long-term growth in sight
But here's the twist: Masisi’s party got wiped out in the election.
A New Chapter with President Duma Boko
Boko immediately promised to rebuild trust with De Beers and rethink the agreement.
This could be huge—because the current deal, even unsigned, is bad for both sides.
- De Beers’ parent company Anglo American only earned $300 million EBITDA in H1 2023
- Botswana got just $177 million from that
- Yet Botswana still gets 30% of its GDP from diamonds
- And Anglo might only sell De Beers for $3 billion (down from $19.6B in 2001!)
The Clock Is Ticking
It’s time to stop pretending. The diamond industry can’t afford another 20 years of slow collapse.
Botswana needs to secure its national interest.
De Beers needs the freedom to run a smart, modern business.
They don’t need a fight. They need a fresh deal.
Because if one falls, they both do.
⏳ Will they do it in time? Or will the sparkle fade for good?