Fiscal boost as De Beers� rough sales rebound
Brian Benza | Wednesday April 13, 2016 18:00
In its third sale of rough diamonds for the year held in Gaborone last week, De Beers recorded sales of $660m, marking a definite upward trend.
De Beers said in the first sale of the year, in January, it notched up sales of $545m, more than doubling the previous year’s final sale of $248m.
In the second sale to its handpicked clients in February, De Beers notched up sales of $617m, which was $7m more than the provisional figure it released last month.
Through royalties, dividends and taxes, government gets about 82 thebe from every one pula 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 percent share of its production to De Beers, which in turn sells the diamonds through 10 sales a year to handpicked buyers called sightholders.
“So far, 2016 has seen significantly stronger rough diamond demand than that experienced at the end of 2015 as the actions taken by the industry continue to have a positive effect,” said De Beers CEO, Philippe Mellier.
“However, we are now moving into a part of the year where rough diamonds demand has historically been lower as a result of seasonality, so we continue to adopt a prudent mind-set,” he said.
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 percent of its revenues from diamonds and 20 percent of GDP, slashed down its 2015 growth to a negative -0.3 while the budget swung into a deficit.
In the year, De Beers sales declined to only 19,4 million carats from 30,8 million carats in 2014 as Debswana produced 20.4 million carats as at December 2015 compared to 24.2 million carats in 2014, and sold 14.7 million carats, compared to 24.2 million carats in 2014.
Revenue from these sales were at $2.35 billion, representing a 38 percent decrease over the 2014 sales. On the other hand, ODC sold 3.22 million carats worth $300 million in 2015 compared to 1.56 million carats worth $545million in 2014.
In the year, De Beers supplied the local cutting and polishing industry with diamonds worth $502.16 million, 46 percent below the 2014 supply.
Mineral revenues are expected to be down seven percent this year due to commodity prices downturn.