Okavango Diamond Company (ODC) seeks $300 million in bank loans to expand its rough diamond purchases, according to Botswana’s finance minister. This request follows a new sales agreement between the Botswana government and De Beers, which increases ODC’s share of rough diamond sales.
Currently, ODC receives 25% of Debswana’s production, a joint venture between Botswana and De Beers. Under the new deal, this will rise to 30% soon and eventually 50%. However, ODC’s current purchasing power is limited to $70 million from its own funds, Finance Minister Peggy Serame revealed to the National Assembly on Thursday.
To support its larger purchases, ODC has hired Standard Chartered Bank to arrange a $300 million credit facility. This facility will last for one year, with an option to extend annually. This new credit line will help ODC buy more from DTC Botswana, which sells Debswana diamonds to De Beers and ODC.
Previously, ODC had a $140 million revolving credit facility with Standard Chartered Bank Botswana, backed by a $100 million government guarantee. Though ODC never used this guarantee, it helped secure favorable pricing. Serame has requested the government increase the guarantee to $175 million and extend it for 10 years.
Serame noted that despite ODC’s strong financial management and balance sheet, current credit market conditions are challenging. Extending the guarantee will support ODC’s larger diamond allocation and help secure better rates for the new credit facility.
