GABORONE, Botswana – August 29, 2024 – Botswana’s state-owned diamond company, the Okavango Diamond Company (ODC), is seeking a hefty loan to ramp up its diamond purchases. Finance Minister Peggy Serame revealed on Thursday that ODC is requesting a $300 million credit facility from local banks.
This move comes as Botswana seeks to capitalize on a new agreement with De Beers, the world’s leading diamond company. The 10-year deal, signed last year, grants ODC a gradually increasing share of rough diamonds from Debswana, a joint venture between Botswana and De Beers. ODC’s allotment will rise from 25% to 30% initially, with a further climb to 50% by the end of the agreement. This increased access to diamonds necessitates a larger financial buffer for ODC.
The $300 million credit facility will replace a previous $140 million facility that matured in 2023. ODC’s current cash reserves only allow purchases of up to $70 million. To secure the new loan, Serame is seeking a $175 million government guarantee from lawmakers.
“The government guarantee is crucial,” explained Serame. “It will not only support ODC’s ability to handle its growing share of De Beers diamonds but also allow the company to negotiate favorable rates for the new credit facility.”
However, the diamond industry is currently facing a downturn. Debswana, for instance, witnessed a worrying 49% drop in sales during the first half of 2024. In October 2023, ODC even halted its diamond sales temporarily, reflecting an industry-wide effort to reduce excess inventory caused by weak global demand for jewelry.
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