Debswana production falls 68% in second quarter
Mbongeni Mguni | Thursday July 16, 2020 16:53
Anglo American production figures revealed earlier today show that the lockdown that stretched between April and May constricted production during the third quarter and while operations restarted, they did so at a muted level to match lower demand. Anglo American owns 85% of De Beers, which in turn owns 50% of Debswana.
Debswana’s production in the second quarter (April, May, June) was a far cry from the 5.7 million carats produced in the corresponding period last year and the 5.6 million carats produced in the first quarter of 2020.
“Production decreased principally due to a nationwide lockdown from April 2 to May 18 and the implementation of Covid-19 measures to safeguard the workforce,” Anglo American’s update reads.
“Operations started from mid-May with production targeted at levels to meet the lower demand.”
Despite the lower production, Debswana’s output in the second quarter still accounted for about 52% of De Beers’ total production across its global operations. The diamond group said demand globally was impacted by the pandemic, particularly its effects on movement of shoppers and access to Southern Africa where buyers purchase the diamonds from.
Rough diamond prices fell during the first half of the year, further putting pressure on producers like De Beers.
The latest trends are in line with expectations by De Beers for a difficult year. Recently, Paul Rowley, De Beers Executive Vice President (Diamond Trading) told local journalists that at global level, the market had ample supply of both rough and polished stones due to lower trading associated with travel bans and movement restrictions in key consumer markets such as the US, China and India.
“There’s no point in pushing goods into a pipeline if there’s no consumer buying and that’s what has been happening while global stores have been closed,” he said.
“With the Chinese New Year being missed, that meant there is plenty of stock for the market reopening.
“There is a lot of polished and rough in the mid-stream from the February auction and also from factories that closed down before they processed.”
Finance and Economic Development minister, Thapelo Matsheka recently said projected mineral revenues down would decline from P20 billion to P6.7 billion, most of that in the diamond sector, as a result of the Coronavirus.
Government and De Beers are equal partners in Debswana.