DTC raises prices of rough in 'bullish' climate

Brian Benza
Staff Writer | Friday February 26, 2010 00:00

Although Kago Mmopi of DTC Botswana will not shed light on the exact amount of the price increases, he says 'there has been some incremental adjustments to DTC box prices over the past few sights and a further and higher single-digit increase for Sight 2.'

Industry sources say DTC has increased its prices by seven to nine percent at its February sale (Sight2) that was held last week and which Mmopi says performed according to expectations and was vastly better than last year's for the same period.

Following a 49 percent drop in sales last year as the market suffered from the economic crisis, DTCB has started to increase its parcel prices in the current climate of more positive economic and supply-demand developments that have been observed in the market lately. Said Mmopi when asked how much the price increases reflect a bullish market recovery: 'It would be premature to say that the period of uncertainty is over, but the industry does appear to be moving in the right direction. DTC sights in the second half of 2009 and into 2010 have seen demand consistently increasing and we are confident that this trend will continue throughout 2010.' DTC cites a number of positive indicators in the market to justify its increases. These include improving consumer confidence in the US and early reports of higher-than-expected diamond jewellery sales in there, a pull-through of inventories in certain categories of rough diamonds and growth in the emerging markets of China and India.

The improvement of rough sales and prices will be welcome news for Botswana as diamond revenues fund about 50 percent of the government's expenditure. But not so good on the DTC Botswana labour front where an offer of voluntary separation with some of its employees that was tabled last year has seen about 60 employees living the company so far. 'The last group of people who opted for voluntary separation left the company on 23rd December 2009 and in total, approximately 60 people have left DTC Botswana,' says Mmopi.

The voluntary separation exercise was one of a number of interventions the company implemented last year to reduce operating costs and protect its long-term financial viability. Although the company last year insisted it had not pre-determined the number of employees to being retrenched, industry sources said at least 103 jobs were be slashed in the cost-cutting measure. 'We have only set a target of how much costs we need to cut,' Mmopi says.

'The number of employees is basically a function of how many from management or lower levels decide to leave.'

As part of their cash-saving plans last year, DTC Botswana also cut employees' daily working hours and slashed working days from five to four a week.