Botswana's President Mokgwetsi Masisi looks at a large diamond discovered in Botswana at his office in Gaborone on August 22, 2024. The 2,492-carat diamond was found at Lucara Diamond Company's Karowe mine in Botswana. (Photo: Monilul Bhuiyan/AFP via Getty Images)
Since 1967, Botswana's presidents have seen the construction of roads like a diamond.
Such was the case last month, when President Mokwetsi Masisi exclaimed that “we will see new roads being built” as he unveiled the biggest diamond find of the century.
The translucent gem, about the size of an adult's palm, is the second-largest diamond ever found and could sell for tens of millions of dollars.
And 10 percent of that goes to Botswana, because the southern African nation has remained at the negotiating table, unlike other countries with plenty of raw materials: Through agreements with mining companies, Botswana earns vital dollars and keeps some of them to sell itself.
But Masisi will have to work harder than his predecessor to keep the cash cow afloat.
Botswana is the world's largest producer of mined diamonds, producing 20% of all diamonds by weight, whose value is declining rapidly due to lab-grown diamonds, which are cheaper and nearly indistinguishable from mined diamonds.
In January, the middle-income country projected its economy would grow by 4.2 percent. But diamond sales fell by nearly half in the first three months of the year.
The International Monetary Fund last month revised its own forecast to say the economy will grow by just 1 percent and recommended cutting spending on infrastructure as state coffers dwindle.
Seeing the change in the market, Botswana began to change its diamond marketing strategy and started investing in more splashy announcements, such as big and rare finds that would make international news.
Canadian mining company Lucara Diamonds helped out. The Karowe mine, 500km north of the capital Gaborone, discovered the diamond after uncovering two other large diamonds during its 12 years of operation, one of which was reportedly sold for more than $50 million.
The 2,492-carat rough stone found last month was discovered using X-ray technology designed to identify large, expensive diamonds and preserve them so they can be extracted whole.
But the discovery of rare and highly sought-after stones “doesn't provide the basis for an industry,” says mining historian Duncan Money. “At the end of the day, it doesn't change the fact that synthetic diamonds are getting cheaper and better.”
So Masisi's other bet is to make more money, even if it means less profit.
Last February, the president threatened to cut ties with Botswana and Anglo American, which jointly owns mining giant De Beers, as well as local mining company Debswana, which runs four of Botswana's five working diamond mines.
Masisi's critics accused him of nationalistic rhetoric, but the renewal (in principle) of the Debswana Agreement a few months later brought some important new changes to the half-century partnership.
Debswana previously sold only 25 percent of its diamonds to the state-run Okavango Diamond Sales Company, but can now sell 30 percent, a figure that is set to rise to 50 percent over the next decade, with the rest going to De Beers, in which Botswana holds a 15 percent stake.
In addition, De Beers will invest 1 billion pula ($75 million) in a development fund, with plans to increase it to 10 billion pula over 10 years.
What the Botswana government is doing to protect its diamond revenues also means keeping others out. When Anglo American announced its separation from De Beers in May this year, Masisi said Botswana was prepared to buy more shares in the resulting company to keep out “bad actors” with “impatient capital.”
De Beers' profits last year were just $72 million, a slump in the diamond industry, but according to Mining Weekly, its profits have historically ranged from $500 million to $1.5 billion. The company aims to get its annual core profits back to $1.5 billion by 2028.
Masisi believes that if Botswana can persevere through the volatile booms and busts of the diamond industry, he and his successors will continue to build roads, schools and hospitals, while others, like Duncan Money, believe it is time for Botswana to start diversifying its economy. Additional reporting by Kiri Rupiah.
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