De Beers, a diamond giant headquartered in the UK, has confirmed its commitment to a planned $1 billion investment in extending the lifespan of the Jwaneng mine in Botswana. The Anglo-American unit and the Botswana government, joint owners of Debswana Diamond Co., have approved the spending to convert the Jwaneng pit into an underground operation. This strategic move, initiated in 2018, aims to prolong the mine's lifespan by eleven years from 2024. De Beers cites the necessity for this investment due to the anticipated tightening of the long-term supply of rough diamonds, as highlighted by the recent downturn in gem demand globally. Despite challenges in the diamond market, the company emphasizes the creation of new value for investors through the Jwaneng underground project.
The decision aligns with De Beers' strategy to prioritize investments in the highest quality projects. With the global supply of natural diamonds decreasing, the investment in the Jwaneng mine positions De Beers strategically to navigate the evolving market dynamics. The company's move comes amidst weak demand for rough diamonds, influenced by factors such as India, the cutter, and polisher of 90% of the world's rough diamonds, urging global miners to halt gemstone sales to manage accumulated stocks. Additionally, De Beers has entered into a new diamond sales pact, gradually increasing the government's share of diamonds from the Debswana joint venture to 50% over the next decade.