Mmegi Online :: Diamond sales register robust 2017 start
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Last Updated
Friday 23 June 2017, 16:05 pm.
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Diamond sales register robust 2017 start

Rough diamond sales have registered a strong start to the year buoying fiscal authorities that get about 50% of annual revenues from diamonds sales.
By Staff Writer Fri 27 Jan 2017, 15:28 pm (GMT +2)
Mmegi Online :: Diamond sales register robust 2017 start








At the first sight of the year held in Gaborone last week, De Beers reported strong improvement with sales fetching  $720m (P7.6 billion) in what is normally one of its strongest demand period.

A year ago, De Beers, 15% owned by government of Botswana, generated $545m from its sales to about 80 handpicked clients called sightholders and through auctions.

“We saw good demand across the majority of our assortment during the first sales cycle of the year, as the industry entered the period when rough diamond demand is traditionally strongest,” said De Beers CEO Bruce Cleaver, adding that the gap between the final sales of last year in December and the first of this year bolstered demand.

At the start of the sale in Gaborone, where the company holds 10 sales events annually after it relocated its sorting, aggregation and sales business from London, Cleaver had warned of the negative effect on rough diamond sales from India’s demonetisation programme to change high-value bank notes in the country.

“While the reopening of some diamond polishing operations in India saw something of an increase in demand for smaller, lower quality rough diamonds, we maintain a cautious outlook for these categories as the Indian industry continues to adjust to the post-demonetisation environment,” Cleaver said this week.

Following a sluggish 2015, diamond sales appear to have turned the corner in 2016, a development that will be music to the ears of fiscal authorities faced with a forecast P6 billion-budget deficit in the financial year ending this March.

Latest financial statistics from the Bank of Botswana show that, thanks to higher mineral revenues, the national budget recorded a P1.65 billion quarterly surplus in the three months ending

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September 2016.

This was the first quarterly budget surplus since the three months ending March 2015 and it was largely driven by P14 billion tax revenue, which includes mineral royalties and dividends. 

This was the highest quarterly tax revenue figure since the 2012-2013 financial years, which is the last quarterly budget figure availed by the central bank.

The quarter ending September 2016 also realised a tax revenue of P1.08 billion, itself also the highest since the last quarter of the 2014-2015 financial year.

Government gets about 80 thebe from every pula worth of diamonds sold by Debswana to De Beers. 

Diamond revenues are accrued from state-owned Okavango Diamond Company (ODC), which sells 15% of Debswana run on mine annual output.

According to estimates provided by Rapaport, De Beers closed 2016 with sales up 36% to $5.58 billion.

Although Debswana is expected to have kept production at a flat 20 million carats in 2016, fiscal authorities will be encouraged by the numbers that show mining bounced back in the third quarter of 2016 to anchor a 4.5% jump in gross domestic product (GDP).

Latest figures from Statistics Botswana show that the domestic economy increased by 4.5% in the third quarter of 2016 compared to a decline of 5.4% recorded in the same quarter of 2015.

The significant growth in the real mining value added by 13.3% was attributed to the increase of the diamond industry value added by 9.3% in the third quarter of 2016 compared to a decline of 33.4% registered in the same quarter of the previous year.

 In the quarter under review, diamond production increased by 9.3% due to positive recovery in the global markets, particularly in the major markets for diamonds.

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