Botswana was expected to finish due diligence on London-listed diversified miner Anglo American’s sale of its 85% stake in diamond producer De Beers Group by the end of September, bringing the government to a decision on its role in the company’s future ownership.

Gaborone has signalled it will raise its existing 15% holding, even as fiscal constraints on a larger investment have become more pronounced. Moody’s Ratings downgraded Botswana to Baa2 from Baa1 on September 25 and warned that a material debt-financed increase in the government’s De Beers stake could put further pressure on the rating.

Days earlier, Vice-President and Finance Minister Ndaba Gaolathe said that the government had yet to settle on a target. “Whatever the number is, it is more than 15%,” he told Bloomberg TV on September 18, adding that Botswana would not invest irresponsibly.

President Duma Boko has pointed to a broader ownership structure. In a CNN interview on September 22, he said Botswana’s stake “will certainly rise”. Other countries, institutional investors and private-sector investors would also take part, he added.

Boko singled out Angola, which Reuters reported earlier this year was targeting a 20%-30% holding through state-owned diamond companies Endiama and Sodiam.

A larger stake would go against advice from the International Monetary Fund (IMF), whose staff cautioned the authorities in December 2025 against increasing their holding, citing Botswana’s fiscal position and its heavy dependence on diamonds.

Anglo (LSE:AAL; JSE:AGL) began the sale with six consortia. The government says three bidders were formally shortlisted, and Reuters has reported that two remain in contention. In July, Minister for State President, Defence and Security Moeti Mohwasa told lawmakers that Anglo had identified the Global Diamond Consortium, led by former De Beers chief executive Gareth Penny, as its preferred bidder. He said Botswana could proceed alongside the group, exercise its pre-emption rights alone or work with another party. Botswana has hired Lazard and Switzerland’s Compagnie Bancaire Helvétique (CBH) as advisers.

See IntelliNews: Botswana nears key decision point on Anglo's proposed $1bn sale of its 85% De Beers stake. Is Gareth Penny's consortium still the preferred bidder?

Anglo has been more guarded. Chief executive Duncan Wanblad said on July 30 that the company was “not exclusive with any consortium”. A preferred bidder can exist without exclusivity, but Anglo has not publicly confirmed Botswana’s description of Penny’s group.

Penny ran De Beers from 2006 to 2010 and now chairs asset manager Ninety One (LSE:N91; JSE:N91). His consortium’s proposal envisages participation by fellow African diamond producers Angola and Namibia. Participants across the competing groups have included a Qatari investment fund and Israeli diamond businessman Nir Livnat, executive chairman of diamond company Diacore.

Botswana’s economy remains tied to De Beers

Diamonds are Botswana’s dominant export, and the government also owns 50% of Debswana, its mining joint venture with De Beers. Botswana accounted for about 69% of De Beers’ rough-diamond production in the first half of 2026, and diamonds made up 72.7% of the country’s goods exports in the third quarter of 2025, according to central bank figures. Debswana employs more than 5,500 people and more than 6,000 contractors.

The ownership question follows the February 2025 signing of a new 10-year sales agreement and the extension of Debswana’s mining licences by 25 years, from August 2029 to July 2054. The deal progressively raises the share of Debswana output available to state-owned Okavango Diamond Company and created a Diamonds for Development Fund to support economic diversification. De Beers committed an initial BWP1bn ($75mn), with total contributions potentially reaching BWP10bn over 10 years, including annual payments linked to its Debswana dividends.

The diamond slump has strained the public finances. Moody’s attributed its downgrade to weaker diamond revenue, lower-than-expected Southern African Customs Union receipts and disappointing proceeds from new tax measures. It moved the outlook to stable from negative, however, citing a stronger fiscal-policy response and the prospect that a sustained recovery in diamond revenue could slow debt accumulation. Moody’s projects gross government debt rising to 41% of GDP by the fiscal year ending March 2028, from 31% in fiscal 2025.

For the current fiscal year ending March 2027, the near-term budget picture has improved. On September 22, Gaolathe cut the projected FY2026/27 deficit to about BWP9.26bn, or 3.1% of GDP, from BWP26.35bn, or 8.9%, in the February budget, after revising revenue up by BWP8.1bn and containing spending.

That narrows the borrowing requirement but does not restore buffers depleted during the downturn. The February budget projected total public debt including guarantees at 44.66% of GDP by the end of FY2026/27 – a broader measure than Moody’s gross-debt figure – and warned that the Government Investment Account had fallen to critically low levels. Foreign-exchange reserves remain sizeable at BWP59.1bn ($4.16bn) at the end of June, equivalent to 7.5 months of imports.

De Beers sale highlights valuation decline

A sale at the reported terms would crystallise a steep decline in De Beers’ valuation during the diamond downturn. Bloomberg reported in July that the structure under discussion involved about $1bn for Anglo’s 85% stake, comprising about $750mn up front and a further $250mn later, with additional payments based on De Beers’ performance after completion. The Global Diamond Consortium could also inject a further $500mn into the business.

The roughly $1bn fixed consideration, before any performance-based payments or capital injection, implies a value of about $1.2bn for the whole of De Beers and puts Botswana’s existing 15% stake at about $176mn. Anglo carried De Beers at $2.3bn at the end of 2025, an accounting measure not directly comparable with the sale price. Its 2011 agreement to pay $5.1bn for the Oppenheimer family’s 40% stake implied a valuation of about $12.75bn.

Applied pro rata, the same valuation shows how Botswana’s outlay would rise with a larger stake: about $118mn for an additional 10 percentage points to reach 25%, and about $424mn for a further 36 points to reach 51%.

Indicative costs are simple pro-rata calculations based on the roughly $1bn consideration reported for Anglo’s 85% stake. They exclude performance-based payments, the proposed $500mn capital injection, subsequent capital requirements, transaction premiums or discounts and do not represent proposed or agreed purchase prices.

Botswana has previously said it wanted a majority stake, but Gaolathe said in September that no target had been settled. A 25% or 30% holding would need far less capital than a majority, and a larger stake could also expose the government to future capital requirements depending on the final shareholder structure. Bringing in other governments and investors, as Boko has suggested, would spread both ownership and financing risk.

See IntelliNews: Botswana pushes for majority control of De Beers as Anglo prepares divestment

De Beers’ production rebounded sharply from a weak 2025 comparison. Rough-diamond production rose 88% year on year to 7.8mn carats in the second quarter, driven by Botswana and Canada, and first-half output increased 46% to 14.91mn carats from 10.2mn carats. The rise partly reflects an extended maintenance shutdown at Botswana’s Orapa mine in 2025, along with planned processing of higher-grade ore at Jwaneng in Botswana and Gahcho Kué in Canada.

Losses persist. De Beers reported an underlying EBITDA loss of $113mn in the first half, 40% narrower than a year earlier. Anglo is divesting the business as part of a restructuring to focus on copper, premium iron ore and crop nutrients.

Independent diamond analyst Paul Zimnisky has said new ownership could give De Beers fresh leadership and strategy, but cautioned that a change of owner alone would not resolve the structural pressures on natural diamonds, including weak consumer demand and competition from lab-grown stones.

Botswana expects the transaction to close in the fourth quarter of 2026. The outcome of its due diligence, expected on September 30, may determine how much public capital it commits, and through which structure.