15 Aug 2024

Government is implementing a strategic initiative to fully optimise the value of diamonds produced in Botswana through Okavango Diamond Company (ODC) and Minerals Development Company Botswana (MDCB).

Answering a question in Parliament on Tuesday, Minister of Minerals and Energy, Honourable Lefoko Moagi said government was resolute in enabling beneficiation and full stream and downstream segment of the Diamond Industry and necessary investments were whenever potential for value was identified.

He said through a Presidential Directive CAB 1SP/2023, government decided to acquire and equity stake in HB Antwerp BV on March 27 last year.

Mr Moagi said the decision to invest in HB Antwerp was taken relying on the recommendation of the Minerals Policy Committee (MPC).

He added that the decision to buy an equity stake in HB Antwerp was for, among other reasons, to enable independent price discovery for ODC, which it never had and to enable ODC to sell rough diamonds through the more commercially sustainable sales method of contracts after selling through auctions since it was established.

Additionally, Mr Moagi said the move was to give Botswana an ownership stake in proprietary cutting and polishing technology, including for small stones.

“This will enable a greater proportion of Debswana’s production, which is currently deemed not economically viable to be cut in Botswana and is therefore exported, to be beneficiated in Botswana using HB Antwerp’s proprietary technology,” he said.

He said the development was also to create jobs in high value segments of the diamond value chain in which Botswana until today have rarely if ever participated, including diamond pricing and marketing.

Due to changes in market conditions following the announcement of the investment in March last year, Mr Moagi said government had prudently decided to renegotiate the terms of the proposed investment.

He said the new equity percentage was currently being re-negotiated from the initial 24 per cent at the time of the announcement and in terms of the cost it was based on the initial cost.

“In other words we are not injecting more capital, but we will get more shares for the same amount proposed in 2023. This will enable Botswana to get more value for every Pula to be invested and get a larger shareholding when the deal is closed,” he said.

He added that government’s intention to invest was informed by due diligence in multiple dimensions and to be specific to the transaction at hand, government completed the legal due diligence, financial due diligence and tax due diligence exercises since 2022.

Again, he said government had signed contracts with due diligence service providers and dictated that their reports be provided to the ministry and MPC to be used for the sole purpose of making the investment decision.

As such, he said they could not be shared with other entities or used for any other purpose until the deal was closed.

He said HB Antwerp was established in 2021 and it was registered in Belgium.

“It cuts, polishes, markets, sells diamonds and develops its own technology to do so. It is not a listed company, so its shares are not traded on any stock exchange. HP Antwerp owns 100 per cent of Genesis in Botswana, which is registered in Botswana,” he said.

Mr Moagi said since HB Antwerp was a private company, whose shares were not traded on any stock exchange, it did not have a publicly stated market value.

He said the value at which government proposed to invest in HB Antwerp was currently being re-negotiated to garner a better deal for Botswana.

“In other words, the current value of the HB Antwerp will be determined as part of an ongoing process of renegotiating the deal due to changes in the market conditions,” he said.

Furthermore, he said government would likely take up a stake in HB Antwerp BV through Khumo Minerals Botswana, one of the three companies formed by government for the purposes of growing Botswana’s participation in minerals value chains and in beneficiation.

Member of Parliament for Selebi Phikwe West, Mr Dithapelo Keorapetse had asked the minister to update Parliament on whether government was seeking to buy a stake in HB Antwerp and explain how the decision was taken including who took such a decisions as well as the amount of stake to be acquired and its cost.

Mr Keorapetse also wanted to establish when due diligence was done and where one could get a report on such and whether the same report was the one that informed the decision, including the company which did the due diligence.

He asked the minister to state and explain when the company was established, where it was registered, what it was trading in and where it has traded.

He also wanted to establish the current market value of HB Antwerp.

In addition, Mr Keorapetse wanted to establish the entity that was used by government in taking up the stake in the company between ODC, MDCB or Botswana Development Company (BDC). ENDS