Botswana's state-owned Okavango Diamond Company (ODC) is seeking a $300 million credit facility from local banks to support increased volumes of diamond purchases, finance minister Peggy Serame announced on Thursday.

Founded in 2012 as a separate entity for the government to sell diamonds independently of the De Beers channel, the Okavango Diamond Company currently sources 25% of its production from Debswana, a joint venture between Botswana and Anglo American's De Beers.

In June of last year, Botswana and De Beers signed a new 10-year diamond sales agreement. Under this deal, the ODC’s share of Debswana's output is set to increase from 30% initially to 50% by the end of the agreement, as Botswana aims to boost its revenue from diamond resources, Reuters news agency reports.

After the maturity of a $140 million working capital facility last year, Serame announced that ODC has engaged Standard Chartered Bank to structure and coordinate a new $300 million syndicated revolving working capital facility.

Serame informed lawmakers that ODC can currently only afford purchases up to $70 million using its own cash reserves. She is seeking approval for a $175 million government guarantee to support the new credit facility.

“The $175 million government guarantee will crucially support ODC's increased entitlement of 30% to Debswana's rough supply, as well as assist the company in negotiating favourable rates in the local market on a new working capital facility,” Serame stated.

The diamond industry is experiencing a downturn, with Debswana's sales dropping 49% in the first half of the year. 

In response to weaker global demand for jewellery, ODC temporarily suspended its rough diamond sales in October last year as part of a broader industry effort to address the excess inventory in the cutting and polishing sector.

However, the diamond industry is anticipated to begin recovering from the effects of weak global demand in Q4 this year. Securing the credit facility would position ODC to take advantage of this anticipated recovery, the finance minister added.