Botswana Supplies the World With Diamonds. It Wants More of the Profits.

Botswana produces more of the world’s diamonds than any country but Russia. But Botswana, a small landlocked nation in southern Africa, keeps only 25 percent of the rough stones extracted in its agreement with De Beers, an international diamond conglomerate. De Beers takes 75 percent.

That disparity has been at the heart of an argument by the president, Mokgweetsi Masisi, that his country is getting a raw deal from De Beers, a London-based company. Mr. Masisi has said that if Botswana does not get more, it might walk away from the half-century-old partnership when the current agreement expires on Friday.

“We must refuse to be enslaved,” he proclaimed last month during a community meeting at a village 250 miles north of the capital, Gaborone.

In publicly ratcheting up the pressure against De Beers, Mr. Masisi is raising a question now echoing across the continent: Can African countries keep a greater share of their wealth?

Sierra Leone, Tanzania and Uganda, with vast mineral wealth and rich oil and gas reserves, are among many countries pressing to hold onto more of the profits from their lucrative resources, arguing that it’s necessary to lift people out of poverty. Long histories of colonial theft, as well as government corruption and mismanagement, have prevented many Africans from benefiting from their nations’ natural riches.

Botswana has profited far more than many other developing countries from its minerals. Since De Beers found diamonds in 1966 and mining revenues began to flow, life expectancy has climbed from 37 to 61 years.

Today, many of Botswana’s 2.4 million people live in sturdy homes with reliable utilities, have access to free health care and a good education. Botswana has the sixth-highest gross domestic product per person in Africa, the World Bank says. In Gaborone, shopping malls are aplenty and the roads are wide and smooth.

But even in Botswana, where the benefits of mineral wealth have spread, many argue that their country is being cheated: the diamonds belong to them, they say, and it’s time for De Beers to take a back seat.

“Let us do it our way,” said Boingotlo Motingwa, 39, who works for a subcontractor at Jwaneng Mine, the world’s most lucrative diamond mine, about two hours west of Gaborone. “We are learned enough now. Like those diamonds, we are processed now.”

Botswana had very little expertise in diamonds, and few resources to mine them, when it first partnered with De Beers. Now, many feel that the country has the experience to wean itself off the corporate giant.

Many Batswana, as the country’s citizens are called, are also demanding more from the deal because their country is one of the most unequal in the world, according to the World Bank.

Barely a five-minute drive from Jwaneng Mine sits a community of boxy yellow and green homes that have no electricity or indoor plumbing. Each night, seven members of the Tsile family cram into a tiny unit costing $11.50 a month. With few jobs available, this was the best they could afford.

“These diamonds are only working for the president, not the ordinary person,” said Kefilwe Tsile, 44 and unemployed.

In fact, with elections scheduled for next year, some said they regard the president’s challenge to De Beers as political posturing.

De Beers secured prospecting rights in Botswana in 1938, when the country was still under British rule. The company first found diamonds beneath Botswana’s arid plains in 1966, the same year the country gained independence.

Over the years, Botswana has eked out a little more each time the deal has been renewed with De Beers, which declined to comment for this article.

De Beers originally kept all of the diamonds it mined. Over time, the Botswana government got an allotment and in 2004 it received a 15 percent ownership stake in De Beers.

Botswana’s early leaders prudently spent and saved the diamond earnings, and there was little corruption, which helped the country flourish, according to analysts.

Since De Beers also pays taxes and royalties on the stones it mines, Botswana’s government makes out better than De Beers in raw financial terms than the 25/75 split would suggest. Botswana earns about 80 cents for every dollar worth of diamonds extracted by De Beers. That amounted to about $2.8 billion for Botswana last year.

But that’s no reason to celebrate, said Lefoko Fox Moagi, Botswana’s minister of minerals and energy. For any company, taxes and royalties are part of doing business, he said. He is more worried about the share of diamonds the government receives.

“If we are equal partners in this, why am I still sitting at 25 percent?” he asked.

Most of the rough diamonds mined in Botswana are shipped to manufacturing hubs like Surat, India, where they are cut and polished into the shiny crystals that greatly increase their value.

Botswana is demanding that more cutting and polishing — as well as jewelry-making and retail sales — happen within its borders, Mr. Moagi said. De Beers has been attracting some buyers to manufacture in Botswana, promising a preferential allocation of stones.

One of those buyers, Venus Jewel, opened a manufacturing facility in Gaborone last year. About half of the company’s manufacturing work force in Botswana is from India, but the company hopes locals can eventually take on most of the work, said Lesego Matsheka, Venus’s managing director in Botswana.

“Most of us grew up with a farm,” she said, referring to her fellow Batswana. “Diamond polishing is something very new.”

Any new deal with De Beers, which profits handsomely from cutting, polishing and selling its Botswana-mined diamonds, would have to include provisions for Botswana to maximize its revenue in those areas, Mr. Moagi said.

“Nobody’s ever ready for a divorce,” he said. “But if you are told to get out of the house, you get out of the house. De Beers is not the only company in the world.”

As if to prove that the Botswana government isn’t afraid to find a new partner, Mr. Masisi has announced that the government would purchase a 24 percent stake in HB Antwerp, a three-year-old Belgian company. It buys rough stones from Lucara Diamond, a company with one Botswana mine. But instead of just paying Lucara the rough stone price, HB pays a percentage of the value of the final polished stone.

That model attracted the government, Mr. Moagi said. Still, the partnership, which has yet to be finalized, has raised alarm among industry experts in Botswana. Many question why the government would partner with such a young and small company when other, larger diamond manufacturers have been operating in the country for at least a decade.

Sheila Khama, the former chief executive of De Beers in Botswana, used to advise governments on natural resource management. Botswana, she said, should focus on how to make it “worthwhile for De Beers to stay in the business of natural diamonds and in the partnership.”

Botswana had the best profit-sharing deal she had ever seen between a country and a mining company, she said. When she was with De Beers, she said, Botswana’s government received about $250 million every six weeks in dividend payments, because of the stake it owns in the company. Now she worries about the effect of the heated rhetoric.

“If in the end it plants the thought on De Beers’s mind to find an exit,” she said, “our diamond resources could potentially become sterile.”

Yvonne Mooka contributed reporting from Gaborone, Botswana.

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