The ODC of Botswana is looking for $300 million in loans to buy diamonds

According to Finance Minister Peggy Serame, Botswana’s state-owned Okavango Diamond Company (ODC) is looking to finance increased purchases of diamonds by obtaining a $300 million credit line from regional banks.

Currently receiving 25% of its production from Debswana, a joint venture between Botswana and Anglo American’s (AAL.L) opens new tab De Beers, ODC was founded in 2012 as an independent window for the government to sell diamonds outside of the De Beers channel.

A new 10-year diamond sales agreement was reached by Botswana and De Beers in June of last year. As part of the country’s efforts to raise revenue from its resources, ODC’s portion of Debswana output will grow to 30% at first and then progressively to 50% by the agreement’s conclusion.

In order to develop and organize a new $300 million syndicated revolving working capital facility, ODC has engaged Standard Chartered Bank (STD.BT), according to Serame, once a $140 million working capital facility matures in 2023.

Serame informed MPs that ODC can only now finance purchases up to $70 million using its own cash reserves while requesting approval for a $175 million government guarantee for the new credit facility.

In addition to helping the business secure competitive rates on a new working capital loan in the local market, Serame stated that “the $175 million government guarantee will crucially support ODC’s increased entitlement of 30% to Debswana’s rough supply.”

Debswana’s revenues fell 49% in the first half of the year due to the market crisis that the diamond industry is currently experiencing.

As part of an industry-wide initiative to minimize the excess inventory in the cutting and polishing sector brought on by the decline in jewelry demand worldwide, ODC temporarily suspended its rough sales in October of last year.

According to Serame, the fourth quarter of 2024 is when the diamond industry is predicted to begin rebounding from the effects of the sluggish global demand, and ODC would be well-positioned to profit from this recovery if the credit facility was available.