GABARONE, Botswana
Botswana’s state-owned Okavango Diamond Company (ODC) seeks a $300 million credit facility from local banks to support larger volumes of diamond purchases, Finance Minister Peggy Serame said on Thursday.
ODC, established in 2012 as an
independent window for the government to sell diamonds outside of the De Beers
channel, currently gets 25% of its production from Debswana, a joint venture
between Botswana and Anglo American’s De Beers.
In June last year Botswana and
De Beers agreed a new 10-year diamond sales agreement, which will see ODC’s
share of Debswana output rise to 30% initially and then increase gradually to
50% by the end of the deal, as the country seeks to get more revenue from its
resources.
Following the maturity of a
$140 million working capital facility in 2023, Serame said ODC has appointed
Standard Chartered Bank to structure and coordinate a new $300 million
syndicated revolving working capital facility.
ODC is currently only able to
afford purchases up to $70 million using its own cash reserves, Serame told
lawmakers as she sought approval for a $175 million government guarantee for
the new credit facility.
“The $175 million government
guarantee will crucially support ODC’s increased entitlement of 30% to
Debswana’s rough supply, as well as assist the company in negotiating
favourable rates in the local market on a new working capital facility,” Serame
said.
The diamond industry is
currently going through a market downturn which has seen sales at Debswana fall
49% in the first half of the year.
In October last year, ODC
temporarily halted its rough sales as part of an industry wide drive to reduce
the glut of inventory in the cutting and polishing industry caused by weaker
global demand for jewellery.
The diamond industry is
expected to start recovering from the impact of weak global demand during the
fourth quarter of 2024, Serame said, and availability of the credit facility
would put ODC in position to benefit from the recovery.
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