FT: Botswana threatens takeover as Anglo prepares to sell De Beers

Key topics:Botswana wants full control of De Beers amid financial strainDiamond market slump fuels tensions in Anglo sale talksOver 10 bidders eye De Beers as Botswana mulls its next move.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Camilla Hodgson and Joseph Cotterill in London and Monica Mark in Johannesburg.When De Beers found diamonds in Botswana in 1967, it set a newly independent nation on a course to become one of Africa’s wealthiest countries.Almost 60 years later, a ferocious attack by Botswana’s government on Anglo American’s sale of one of the world’s most valuable diamond producers has shown just how quickly that long relationship has hit the rocks.The country’s mining minister told the Financial Times last week that President Duma Boko was serious about turning Botswana’s 15 per cent stake in De Beers into “full control over this strategic national asset”, as tensions rose during the worst slump in the diamond market in decades.Boko said in a fiery July speech that Botswana, the source of most of De Beers’ diamonds and reliant on the stones for most of its exports, was “broke”, adding the company was “not doing its job. Maybe we should take over and sell them ourselves.”Days before an Anglo deadline for initial bids for its 85 per cent stake, potential buyers are wondering if Botswana really could mount a takeover, or if it is bluster from a government that swept to power on populist promises but is now strapped for cash.Its financial strains meant the prospect of Botswana’s government acquiring De Beers “seems far-fetched and improbable”, said Kieron Hodgson, an analyst at Peel Hunt.Botswana would have pre-emption rights in a sale as an existing shareholder, but would need to raise funds to finance a takeover, given pressure on its foreign currency reserves, which stood at $3.5bn in May, down from $4.8bn a year earlier, according to the Bank of Botswana..Anglo is under pressure to offload De Beers quickly, as part of restructuring promised after it fought off a £39bn hostile takeover bid from rival BHP last year. Boko’s broadside has “ruffled a few feathers and will do no good in attracting funding partners” for other bids, said one industry expert..Read more:. FT: World’s second-largest diamond found in Botswana.Boko, elected last year, is the country’s first president to come from outside the Botswana Democratic party, which had governed since the country’s independence in 1966. The BDP had steered regular negotiations with De Beers over stones produced through their 50-50 joint venture, Debswana, but relations soured in 2023, as a downturn in the global diamond market hit prices and production.Just before he was voted out last year, Boko’s predecessor Mokgweetsi Masisi accused De Beers of having “short-changed” the country, before agreeing a new 10-year sales deal that let Botswana retain more Debswana output to sell via a state-owned firm.The latest rhetoric from Boko “might be a negotiating tactic — you say something on the extreme and then try to negotiate it to the centre,” Ronak Gopaldas, director at Signal Risk, a consultancy, said.People familiar with the sale process said two former De Beers bosses, Gareth Penny and Bruce Cleaver, were among those drawing up offers for the unit, whose value Anglo has written down twice in the past two years to $4.9bn, around $2bn of which is inventory. More than 10 parties have expressed interest in the unit, according to another individual with knowledge of the sale, including some of the buyers of rough diamonds from De Beers.Competition from lab-grown alternatives and a slump in demand in markets including China and the US meant De Beers’ revenues last year were just half of what they were in 2022. Meanwhile, the group’s production in Botswana in the three months to June fell by 44 per cent year on year to 2.7mn carats..Penny has hired Standard Chartered bank and is pulling together a bid based on restoring the appeal of natural diamonds and spending more on marketing, according to a person familiar with the matter. Penny and Cleaver declined to comment.For Anglo a sale price of about $1bn “would be a result,” said Hodgson. The value of the diamond stocks was hard to estimate, he added.Paul Zimnisky, an independent diamond analyst, said it would be a “mistake” for Anglo to sell De Beers “at a deep discount in the midst of the diamond market lull”. Anglo has said it is pursuing a “dual track” approach to the De Beers disposal, preparing for a potential initial public offering if it does not receive strong enough bids from buyers. The group has said that the process could stretch into next year and that “we are of course engaging the government of the Republic of Botswana on a regular basis”.Since Anglo had also found buyers for coal, nickel and platinum businesses as part of its restructuring, “I don’t see the rush to unload De Beers for well under book value,” said Zimnisky.The company could “afford to wait a couple more years in order to get a fair price”, he said, adding that Anglo may be cautious about pricing since it spun off its platinum business “right before platinum prices rallied to the highest level in a decade”.Even before Boko’s latest comments, Botswana’s government had said it wanted to increase its 15 per cent stake in the company. But it has declined to do so in the past because of fiscal concerns.In 2011, a need to balance the budget meant the country did not exercise pre-emption rights to raise its shareholding when the Oppenheimer family, which had owned part of De Beers since 1926, sold its 40 per cent stake, enabling Anglo to build its current position.“That logic of 2011 still holds — but it holds even more now. The Botswana government is not as liquid as it was,” said a person with knowledge of past discussions on the stake.Botswana recently hired a Swiss private bank, CBH, to advise it on the De Beers sale, according to two people with knowledge of the matter. CBH declined to comment and Botswana did not respond to requests for comment.Another person familiar with official thinking said there was “no consolidated view within the government,” adding that other options also included leaning on De Beers to allow prices to soften in order to boost demand, or to give more supply to the state’s own seller.“The view coming out of the presidency is . . . we should just sell [more diamonds from the stockpile],” the person added. But officials in the minerals ministry, were “not so keen” on such a strategy, he said..© 2025 The Financial Times Ltd.

FT: Botswana threatens takeover as Anglo prepares to sell De Beers

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