Market sentiment recovers at ODC


State-owned Okavango Diamond Company (ODC) says market sentiment improved at its first auction of the year held in Gaborone recently with healthy demand for rough stones.

Although the company auctioned fewer gemstones compared to the first sale of last year, appetite from buyers was much improved from the soft demand experienced in the last quarter of 2015 when the company had to cancel the last two auctions of the year.

In response to BusinessWeek enquiries, ODC Managing Director Toby Frears said in the January 2016 auction they sold 216,000 carats for $44.4 million (P515 million), including a single 184-carat stone, which sold for $4.8 million (P55.7 million).

In the January 2015 auction, ODC sold 280,000 carats for $35.7 million, including a 114-carat stone, which sold for $5.1 million.   

“We saw an improvement in market sentiment at our January sale compared to the fourth quarter of 2015.  The healthy demand we witnessed was driven by factory capacity needs after a sustained period of reduced manufacturing and reasonable polished sales during Christmas and ahead of the Chinese New Year. However, the upturn we’ve seen in the market remains very sensitive to short term rough supply volumes,” he said. The rebound in demand at ODC mirrors De Beers’ first sight of the year where sales were more than doubled compared to December 2015.

De Beers, which is entitled to sell 86 percent of Debswana’s annual production, and hand 80 percent of that revenue to government, sold $540 million (P6.3 billion) worth of diamonds last month.

This represented a 117 percent leap with De Beers having recorded sales of $248 million in its last sale of a challenging 2015.

De Beers holds 10 sales a year - called sights - for handpicked buyers called sightholders.

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.

Sales by ODC also fell 45 percent to $303 million in 2015, weighed down by “very challenging market conditions” in the mid-stream.

Established as part of the 2011 renewal of a sales agreement between De Beers and government, ODC in 2015 was entitled to purchase 14 percent of Debswana’s production and independently auction it. Contractually, the figure rises to 15 percent this year.

Debswana targets to produce 20 million carats this year, availing about three million carats for sale by ODC.

Editor's Comment
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The government has without a doubt come up with good initiatives such as partnering with private medical practitioners in the vaccine roll-out. This was indeed a welcome development that reduced congestions at government vaccination centres.Well, unfortunately, the celebrations were short-lived. People flocked to the vaccination centres in large numbers and most of the private clinics are currently left with no vaccines and unending telephone...

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