ODC sales fall 20% on weaker market

Brian Benza | Friday May 29, 2015 11:31

ODC, which has held four tenders in 2015, is expected to sell 14 percent of Debswana’s production through auctions this year as Botswana seeks to develop its own price book through the independent window outside of De Beers’ channels.

Stakeholder relations executive officer at ODC, Kutlo Thathana told BusinessWeek that from January to May 2015, the four auctions have accrued total sales of approximately 1.02 million carats for $193,1million (P1.8 billion).

“In comparison to the same period in 2014, ODC sales are approximately 20 percent down in volume due to both production declines and weaker market sentiment.

Our prices are set by our customers through a competitive and transparent bidding process and reflect prevailing rough market conditions. Global rough prices have softened since the 4th quarter of 2014, largely as a result of weaker polished prices,” she said.

ODC holds ten auctions in a year, which are attended by both local and international buyers.  At the May auction sale, ODC sold a total of approximately 157 000 carats for US$ 32,4million. The state owned company sold approximately 3.27 million carats, achieving revenue of $552m (P5.2 billion) in 2014, which was its first full year of operation.

As per the 2011 agreement with De Beers, ODC’s supply of the diamonds increases by one percent annually, until it reaches 15 percent by 2016.

ODC buys partially sorted diamonds from De Beers Global Sightholder Sales (DGSS) and then sorts the goods into its own sales assortment before inviting its customers to view and purchase the stones through an auction process. On average, Okavango sells about 250,000 carats of rough diamonds per auction with projected annual sales of about $400 million (P3.5 billion). Thathana added that plans are still underway to introduce contract sales to complement auctions.

“It remains our intention to introduce contract sales to complement our regular spot auctions as we recognise the importance some customers place on regular committed supply arrangements. We will introduce contract sales when we have the necessary volumes to support contract and auction sales in parallel,” she said.

Currently, the diamond company only sells through auctions.