The Debswana Diamond Company's $1 billion investment will turn the diamond-rich Jwaneng mine from an open-pit site to an underground operation.

The mine accounts for about 70 percent of profits for Debswana -- a 50-50 joint venture between the government and De Beers, which auctions most of the gemstones.

The move, which comes amid a global drop in demand for the precious gems, will extend its life span by 20 years and yield up to nine million carats per year, the firm said last year.

Leading diamond producer

"Investing in underground operations is... fundamentally important to the future of Botswana as a nation, to the long-term ambitions of the De Beers Group, and to the supply outlook for the global diamond industry," said De Beers CEO Al Cook.

Botswana is Africa's leading diamond producer and diamond mining accounts for a third of its GDP.

Last year the government and mining giant Anglo American, the majority owner of De Beers, reached a deal which provides for a new 10-year agreement to sell the rough diamonds produced by Debswana and a 25-year extension of its mining licenses.

Diamond miners across the region have often had to dig deeper, shouldering higher costs, in recent years as gems closer to the surface deplete.