Diamond exports drop to seven-year low
Brian Benza | Tuesday February 9, 2016 18:00
According to statistics published by the Bank of Botswana yesterday, the value of exports from the major diamond mines in Botswana fell to $2.4 billion (P28.5 billion) in 2015 from $3.9 billion (P45.6 billion) the previous year.
The figures however do not include diamonds that De Beers brings in the country for aggregation before re-exportation.
Botswana diamond exports were last recorded lower during the 2009 global financial crisis when the country’s mines exported $1.8 billion worth of stones.
The country’s exports are largely dominated by Debswana Diamond Company’s four mines while Lucara’s Karowe Mine is the only other significant producer in the country having had dug up about an estimated 400,000 carats in 2015.
The slowdown in exports has also seen government mineral revenues falling 15 percent to P18.2 billion in 2015 while economic growth forecast were also slashed to one percent from 3.2 percent.
“The continued slowdown of growth in the global economy, particularly in the major markets for our diamonds, has had profound impact on the domestic economy,” the Minister of finance and development planning, Kenneth Matambo said last week in his 2016 budget speech. The decline in exports mirrors a 16 percent drop in production at Debswana where 20.4 million carats were dug up in 2015 from 23.3 million carats the previous year.
Analysts at Econsult say despite the immediate economic outlook remaining poor there is, however, some room for optimism.
“There are signs that the global diamond market is beginning to stabilise, and that measures undertaken by De Beers and others to reduce supply and prices of rough diamonds are beginning to take effect.
“Combined with reasonably good jewellery sales over the peak Christmas period, the diamond pipeline is flowing again as demand is rising for polished goods, and this will in turn help rough demand,” said the analysts.
De Beers has reported a more than double jump in diamond sales at its first sale of the year held in Gaborone recently, a development that is likely to boost fiscal authorities’ annual revenue projections.
The company, which is entitled to sell 85 percent of Debswana’s annual production, and hand 80 percent of that revenue to government, sold $540 million (P6.3 billion) worth of diamonds in the sight.
This represented a 117 percent leap with De Beers having had recorded sales of $248 million in its last sale of a challenging 2015.
However for 2016, Debswana has again reduced production targets to 20 million carats, but if the market stabilises there is a good chance that production will not have to be reduced further.
“Nevertheless, this will weigh on GDP growth – which we forecast at two percent for 2016 – as well as the balance of payments and government revenues. As long as there is no major disruption from regional or global events, 2016 should mark the turning point with the prospect of improved economic conditions ahead,” added the Econsult report.