Botswana confirmed on Monday market rumours indicating the country wants to increase its shareholding in De Beers, as parent company Anglo American (LON: AAL) prepares to spin off or sell the diamond producer.听
鈥淲e are going to increase the shares that we have in De Beers,鈥� President Mokgweetsi Masisi said on Monday at a political rally north of the capital, Gaborone, .
Masisi also said the government will play a central role in selecting a new investor to replace Anglo at De Beers. The focus will be on finding an investor who understands the cyclical nature of the diamond industry, he noted.
The government of Botswana currently holds a 15% stake in De Beers, the world鈥檚聽largest diamond miner by value, and the country accounts for 70% of the company鈥檚 annual rough diamond supply.
Anglo American announced last month its intention to either sell or spin off its 85% stake in De Beers to fend off an unsolicited takeover bid from BHP聽(ASX: BHP). Anglo acquired the diamond giant in 2011, buying the Oppenheimer family鈥檚 40% stake for $5.1 billion.
De Beers is key to Botswana鈥檚 economy. In January, the company committed to spend $1 billion聽to increase the life of its flagship Jwaneng mine by moving operations underground. Extending the productive life of Jwaneng, the world鈥檚 richest mine in term of diamonds value, has been in the cards since 2010.听
Debswana, the local company jointly owned by the government and De Beers, makes up a fifth of the country鈥檚 GDP.听 It is also critical to De Beers as it contributes nearly half the carats the company produces each year.听
Ditching lab-made stones
In preparation for the split from Anglo, the diamond giant 鈥� which coined the slogan 鈥淒iamonds are Forever鈥濃�� is also聽ditching man-made stones.聽This means it would end a six-year experiment to sell lab-grown diamond jewellery through its own brand, Lightbox,聽created in 2018.
While the miner is not halting the sale of its Lightbox stones right away, it will put the unit聽under review once it depletes current inventory, which will take about a year.
De Beers is targeting annual core profits of $1.5 billion by 2028. Last year, the business made just $72 million, though traditionally its profits have ranged between $500 million and $1.5 billion as the diamond industry swings from boom to bust.
The diamond miner seems ready to fly alone as it did for 124 of its 136 years of existence. Anglo American acquired a majority stake in De Beers only 13 years ago. The government of Botswana holds the remaining shares.