Diamond sales drop marginally to P5b

399,Staff Writer,, | Monday May 16, 2016 00:00

In its penultimate sale of 2016, De Beers sold diamonds worth $470 million (P5 billion), five percent lower than the $494 million (P5.2 billion) earned in the eighth sales cycle.

“Encouragingly, the ninth sales cycle showed continued good demand for De Beers’ rough diamonds, with sales in line with expected seasonal demand patterns,” CEO, Bruce Cleaver commented. De Beers holds 10 sights a year to handpicked buyers who come to Gaborone from major cutting centres such as Tel Aviv, Mumbai, Antwerp to negotiate their parcels.

Despite the sales decline in the ninth sight, diamond sales this year are still significantly higher than in 2015, a development that would be a boost for Botswana. Through royalties, dividends and taxes, government gets about 82 thebe from every P1 worth of diamonds that Debswana sells to De Beers. Debswana, which mined 20.4 million carats last year, sells all but Okavango Diamond Company’s (ODC) 15% share of its production to De Beers.

Rough diamond sales hit rock bottom in 2015 due to an ‘indigestion’ in the diamond pipeline as cutters and polishers, who suffered from low polished prices, pooled rough diamonds.

As a result, Botswana, which gets 40% of its revenues from diamonds and 20% of gross domestic product, slashed down its 2015 growth to a negative -0.3% while the budget swung into a deficit. Economic growth is, however, expected to bounce back this year to 3.5% on the back of the recovery in the diamond sector as well as increased government spending.

Production at Debswana rose by 12% in the third quarter of this year to 4.5 million carats largely driven by a huge jump in output at its flagship Jwaneng Mine.

In the first nine months of the year, production at Debswana stood at 15.06 million carats.

In 2016, the company, which produces about 70% of parent company De Beers’ production, plans to keep output at a flat 20 million carats this year, as it remains cautiously optimistic of the market despite signs of improved market sentiment in 2016.

Speaking at a diamond conference held in Gaborone last week, Cleaver said the industry is currently facing a number of challenges ranging from the future of financing, industry efficiency and changing consumer trends.

“While we are seeing changing consumer trends, the same forces that drive these are also delivering the creation of millions of new middle class households around the world – especially in China - as well as the financial maturation of the millennial generation,” Cleaver said.