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Potential BHP-Anglo deal: Botswana vows to protect interests

Botswana President Mokgweetsi Masisi has affirmed the nation’s commitment to safeguarding its interests, notably its 15% stake in diamond giant De Beers, amidst discussions of a potential acquisition involving BHP Group Ltd. and Anglo American Plc.

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Anglo, having rebuffed a BHP proposal valuing the company at approximately $39 billion, currently holds the remaining 85% stake in De Beers. BHP’s proposed acquisition entails subjecting De Beers to a strategic review. Meanwhile, Anglo, the sole major miner with a substantial diamond business, has been evaluating the future of units, including De Beers.

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President Masisi clarified that Botswana has not received formal approaches from either BHP or Anglo. He emphasized Botswana’s commitment to protecting its interests, asserting, “No way would we allow ourselves to willingly be made redundant or irrelevant.” Masisi stated that Botswana would respond in ways protective of its interests.

Botswana’s stance poses additional considerations for BHP CEO Mike Henry, who faces a plethora of challenges in executing a potentially intricate deal. Antitrust authorities across various jurisdictions, including China, South Africa, and Japan, are expected to scrutinize any acquisition that would result in the world’s largest copper producer.

BHP’s proposal, involving a plan for Anglo to divest its Johannesburg-listed platinum and iron ore units before a subsequent acquisition of the remaining assets, has drawn criticism from segments of South Africa’s government.

Despite challenges, the diamond industry is gradually rebounding following a period of near-standstill last year, as major miners like De Beers and Russia’s Alrosa PJSC curtailed supplies to counter a decline in prices. Notably, De Beers, which derives over three-quarters of its diamonds from Botswana, took a hit on earnings.

President Masisi underscored the significance of Botswana’s contribution to De Beers’ value, stating, “The value of De Beers is fundamentally created by Botswana.” Botswana stands as the world’s largest producer of rough diamonds by value, with diamond revenues forming a substantial portion of the nation’s budget receipts. Anglo estimates its total economic contribution to Botswana at $1.16 billion last year, with a significant portion derived from taxes and royalties.

Notably, De Beers reached an agreement with Botswana’s government to increase diamond allocations, with negotiations concluding in the middle of last year, coinciding with the expiration of the latest deal deadline.

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