Debswana on track for 24m carat target
Pauline Dikuelo | Friday September 14, 2018 18:00
Should the diamond mining giant make the target, 2018 production will be the highest since 2014 when Jwaneng, Orapa and Letlhakane produced 24.2 million carats. In 2015, Debswana dug up 20.4 million carats, followed by 20.5 million in 2016 and 22.7 million in 2017.
While Debswana’s targets are a closely guarded secret, the numbers established this week suggest the world leading diamond producer is on track for a strong year.
By the half-year mark of 2018, Debswana’s mines had already produced 12.1 million carats, up from 11.1 million the previous corresponding period. Debswana traditionally produces more stones in the second half of each year, than the first, as its peak marketing period occurs around the global end-year holidays.
After producing 11.1 million carats in the first half of 2017, the miner dug up another 11.6 million in the second half of the year.
On Tuesday, Bank of Botswana (BoB) researchers said the stronger global demand for diamonds would lift the local economy in the short to medium term.
“In the context of the anticipated improvement in most advanced and emerging market economies, which are major markets for Botswana’s rough diamonds, domestic economic activity is expected to increase in the short to medium term,” the researchers said in the inaugural Monetary Policy Report.
The BoB however noted that the simmering trade war between China and the US as well as protectionist trade and economic policies by both countries and others, were a threat to the forecast of robust local growth.
“The protectionist policies by the US and China could have a negative impact on global trade and, in turn, global economic growth.
“This could result in a fall in global demand and commodity prices, especially those of rough diamonds, and impact negatively on the domestic economic outlook,” the Bank’s researchers said. While the rosier rough diamond outlook has spurred hope that the economy could attain government’s forecast of 5.3 percent for 2018, Debswana’s sales thus far this year suggest the positive trends may not spill over to the national coffers.
The company’s sales for the six months to June 30 were P16.3 billion or nine percent lower than sales in the corresponding period, despite production in the same period being nine percent higher.
De Beers, which owns 50% of Debswana, this week announced the results of its seventh auction of the year showing the weakest results thus far in the year at US$505 million (about P5.1 billion).
De Beers’ executive vice president, Diamond Trading, Paul Rowley previously told BusinessWeek that Debswana’s production had sold at an average price of US$155/carat in the first six months of the year, down from US$165/carat realised over the corresponding period in 2017.
The BoB also expects non-mining to better support growth in the short to medium term, anchored by stable water and electricity supply as well as increased government expenditure.
Non-mining sectors expected to shine in the short to medium term include trade, hotels and restaurants driven by diamond activities, finance and business services as a result of doing business reforms, construction as well as transport and communications.
“Continued government efforts to promote growth of Small, Medium and Micro Enterprises) and citizen economic empowerment initiatives are expected to boost household business enterprises.
“For example, government has signed a Memorandum of Understanding with the De Beers Group of companies to facilitate implementation of the Tokafala Enterprise Development Programme,” the central bank researchers said.