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Anglo American has moved to reassure investors that the sale of De Beers should come in “weeks rather than months” in recent days, lifting the mood around a strategic setback that has plagued the company for nearly two years.In an interview with Reuters earlier this week, De Beers CEO Al Cook was confident that Anglo would soon settle on a public-private consortium made up of wealthy private investors and the governments of diamond-producing nations to take over the ailing diamond business.While successive impairments over the past five years mean that the subsidiary will probably be sold at a discount, this is nonetheless welcome news for Anglo shareholders.A deal would provide a windfall to the group’s balance sheet, which has been hammered by multibillion-dollar write-downs in the past three years. It would also put Anglo back on track to complete its portfolio restructuring, a core pillar of its growth strategy, in time for a looming mega merger with Canadian copper miner Teck Resources.But for economists eyeing the diamond-producing countries included in the final bidding pool, the De Beers deal may raise some uncomfortable questions about the steadily shrinking demand for diamonds.Resource dependence has been at the heart of Africa’s postcolonial development challenges for decades. Much of the continent’s struggle to provide steady wages for uneducated workers or to build and maintain infrastructure, from factories to schools and hospitals, comes from an overreliance on commodities, which makes government revenue, and thus public funding, vulnerable to price swings.Hardly any example offers a better contemporary illustration of the so-called “commodity trap” than the diamond industry, particularly in Botswana, one of the world’s largest producers.Diamonds, which account for about a quarter of Botswana’s GDP and 80% of its exports, are at the heart of the country’s impressive growth story.Major diamond deposits discovered just two years after its independence from Britain allowed the country to secure an enviable source of revenue in the form of Debswana, a 50/50 joint venture with De Beers.Almost immediately, this saw Botswana’s economy growing at a far greater pace than it had under colonial rule. From 1970 to 2000, GDP expanded by an average 10.6% a year, even outpacing China’s average over the same period.Since the turn of the century, however, diamonds have become the source of Botswana’s most pressing economic challenges. A shrinking market for natural stones has strangled GDP growth and fuelled a ballooning debt to GDP ratio in recent years, culminating in ratings downgrades by Moody’s and S&P Global in 2025.As the technology behind lab-grown stones develops further, forecasts about natural diamond demand point to a steady, lasting decline which could continue to hamper Botswana’s prospects.In 2025, De Beers saw its third consecutive write-down in three years. Its estimated value has plunged from $12.75bn in 2011 to just $2.3bn this year. This alone should raise some red flags for governments eager to increase their stakes.Still, in an effort to protect jobs and retain control of the industry, Botswana’s government has shown an interest in growing its stake in De Beers in recent months.Other African governments have also joined the fray, with Angola’s state-owned gem miner Endiama joining the list of potential buyers late last year.Earlier this year, Reuters reported that Angola was pursuing a substantial 20%-30% stake in the unit, while Botswana has talked about acquiring a majority stake.Reuters reported on Tuesday that there are now just two consortiums vying for stakes in De Beers, down from six last year.Aside from a handful of governments, the remaining buyers apparently include a Qatari investment fund, Ninety One chair and former De Beers CEO Gareth Penny and Israeli business person Nir Livnat.
