De Beers optimistic despite Omicron threat
Mbongeni Mguni | Monday December 20, 2021 06:00
As the country’s most important economic actor, De Beers co-owns Debswana with the Government of Botswana and earnings from the local mines are the principal anchors of national budget revenues and foreign exchange. This year, it is expected that government’s original forecast of P20.3 billion in mineral revenues will be exceeded due to a rebound in rough diamond sales.
However, the imposition of travel bans on Botswana by key rough diamond markets such as the United States and India, in response to the Omicron threat, has caused anxiety in the industry, which had been recovering well from the COVID-19 induced downturn of 2020.
This week, De Beers said should it become impossible for its buyers to travel to Botswana for rough diamond auctions, the group would continue with an already tested alternative of offering viewings in other locations.
“As has been the case throughout the year, we will offer viewings in other locations, as well as hosting the sight (auction) in Botswana for clients who are based locally or those who elect to travel to Botswana and are able to do so in light of the prevailing travel restrictions,” Paul Rowley, De Beers’ executive vice president Diamond Trading, said in response to BusinessWeek enquiries.
De Beers holds 10 sights or auctions in Gaborone each year where rough diamonds from its operations across the world are offered for viewing and buying by its exclusive list of buyers known as sightholders. After the onset of COVID-19 last year, De Beers was forced to cancel its third auction and move its sales closer to other international diamond centres.
Rowley said it was still too early to assess the impact of the Omicron variant on the business as significant uncertainty remained with scientific analysis ongoing. However, he said overall diamond industry sentiment continued to be positive on the back of strong demand for diamond jewellery from US consumers.
“This was reflected in the demand we saw for rough diamonds during Cycle 9 (the ninth auction). “Such demand was in line with expectations given the normal pattern of cutting factory closures in India during the Diwali festival,” he said.
Rowley added that as the group heads into the final auction of the year, it expected rough diamond demand would be affected by the Christmas holiday closure of cutting factories in southern Africa.
“However, we expect to see positive industry conditions prevailing into the new year in light of the healthy outlook for the key retail selling season,” he said.
De Beers expects to produce about 32 million carats of rough diamonds this year, up from 25 million carats last year. Within that, its Botswana mines under Debswana will provide the bulk of the output.