Debswana H1 output down 9%

Mbongeni Mguni | Friday July 22, 2016 13:03

According to figures published by Debswana parent, De Beers, on Wednesday, the diamond giant’s local mines produced 5.2 million carats in the second quarter of the year, marginally down from 5.3 million in the first quarter.

“Production decreased by 12 percent to 5.2 million (in the second quarter) with Orapa Mine reduced by 27 percent and the placing of Damtshaa Mine on care and maintenance from January 1, 2016,” De Beers said in a statement.

Despite the reduction, stones from Debswana made up 79% of De Beers’ global output for the first half of the year and 81% of its second quarter production.

The pull-back in production is in line with a policy adopted earlier this year, in which Debswana announced its 2016 production would be maintained at 2015’s 20 million carats to rebalance weak market fundamentals. In 2015, Debswana as De Beers’ biggest producer, cut production by three million to counteract poor demand for rough diamonds which had occurred as a result of the oversupply of polished stones upstream in the market.

The reduced production involves the suspension of Damtshaa and shifting more production to Jwaneng Mine, which is a high value, low cost asset, while reducing output from Orapa and Letlhakane. This year, Jwaneng Mine is expected to produce about 12 million carats whilst Orapa, Letlhakane and Damtshaa Mines will produce around eight million carats.

The measures also involved redeploying 242 employees affected by the mothballing of Damtshaa Mine, to other areas of Debswana, and thus avoiding the sweeping job losses that occurred in the previous diamond slump in 2009. Demand for rough diamonds has rebounded in 2016, with De Beers noting healthy sales at the five auctions it has held this year. While the auctions have raked in more than US$3 billion, analysts have noted that the last two, held in May and June, had declining sales values than the preceding auctions.

Debswana MD, Balisi Bonyongo told captains of industry recently that the rough diamond industry was not out of the woods yet.

“It’s a Vuka world meaning it’s a very uncertain world, complex and volatile,” said Bonyongo. “The first sights (auctions) are showing a positive trend, but it’s still very volatile and uncertain. We cannot let the trend lull us into believing stable recovery has come. “We are watching the market and the current positive trend of sales. Right now, it’s a wait and see.”