In an interview on CNN last week, De Beers' Chairman Nicky Oppenheimer said demand for diamonds was "most probably" outstripping supply and that De Beers wants to produce as many diamonds as possible.

Oppenheimer said the Chinese and Indians were showing a "tremendous desire" to own diamonds and that the two countries would be "tremendously important" diamond markets in the future.

But while China and India were "very exiting places" for diamond sales, the US continued to account for half of diamond demand.

The diamond market froze after banks, in October and November last year, refused to extend loans to sightholders and manufacturers that typically buy rough diamond stock on credit.

Since then, recovery has been slow, partly because stocks of both rough and finished diamonds remain very high.Overall, De Beers expects its production in Botswana to fall by about 40 percent compared with 2008. Debswana, the joint partnership between De Beers and the government, says full recovery is only expected in 2012, although the company has made remarkable recovery since the first quarter of the year.

According to Debswana, no diamonds were sold in the months of November and December before sales improved to just under US$50 million in February.

In the third quarter, which is Debswana's best period traditionally, sales significantly improved, with August sales rising to just under US$250 million, falling slightly short of the company's normal monthly average sales of around US$300 million.

However, despite the improvement, the sales are still miles away from the August 2008 sales of around US$450 million. De Beers, which produces around 40 percent of the world's rough diamonds, was forced to shut down its Botswana operations earlier this year in response to a slide in demand for gemstones.

As a result of the fall in demand for diamonds, which contribute 33 percent to Botswana's GDP and 75 percent to its foreign exchange earnings, the country posted a budget deficit for the first time in many years in the past fiscal year.

The country's over-reliance on diamonds is set to become one of the main challenges for Ian Khama who is being sworn in today (Tuesday) after his party won the country's 10th general elections over the weekend.

Although economic diversification has been on the government's agenda for almost 10 years now, not much progress has been done in that regard.