Projected robust demand for rough diamonds in the second half of the year is expected to lift Debswana’s production to peak levels last seen in 2014, Mmegi Business has established.
Debswana produced 24.2 million carats in 2014 before mid-stream overstocking and weak demand forced a limiting of production to 20.4m in 2015 and 20.5m carats in 2016. In April, the diamond giant revealed it was targeting 20.5m this year, but last week, a De Beers executive confirmed the figure would likely be closer to 22 million.
De Beers executive head (strategy and corporate affairs) Gareth Mostyn told Mmegi Business the prospects for healthy demand in the second half of the year were looking strong. Debswana’s three mines produced 11.12m carats in the first six months of the year, representing 70% of De Beers’ global production. De Beers holds 50% equity in Debswana.
“At group level, our target is 31 to 33 million carats for the year and for the half year, we are at 16.1 million which implies a doubling in the second half,” Mostyn said. “I would expect a similar doubling from Debswana. The market has been looking quite robust and we have decided to produce in order to supply that. Based on the current trajectory, Debswana will be higher than 20.5 million.”
Mostyn said De Beers was expecting marginal growth in the US market this year, while prospects for China were bullish and sentiment amongst Indian retailers was stronger.
De Beers’ global rough diamond production increased by 21% to 16.1 million carats in the first half compared to 13.3 million carats over the corresponding period last year.
The executive head said the improved production reflected stable trading conditions as well as the contribution from the ramp-up of Gahcho Kue in Canada.
Botswana production, he said, has been aided by the return of a 46-year-old processing plant at Orapa, which was put under partial care and maintenance in December 2015, as a measure against weak demand.
Production at Orapa increased by 22% driven by the ramp-up of the Number One plant following its having been on partial care and maintenance response to trading conditions in late 2015, together with higher grades.
Mostyn told journalists that Botswana continues to lead in the group’s beneficiation, as it is currently the leading cutting and polishing sector in Southern Africa. Botswana currently has 17 operational factories and one sub-contracting factory employing around 2,200 people.
“The higher value of diamonds sold in-country for beneficiation in Botswana is higher than in any other diamond producing country,” he said.