Okavango Diamond Company sales jump 80%
Brian Benza | Friday February 3, 2017 14:49
The increase signals a significant recovery in the market after sales for the state-owned rough diamond marketing company fell 45% in 2015.
ODC deputy managing director, Marcus ter Haar told BusinessWeek that overall volumes also rose by 115% to 3.44 million carats after accounting for various post sale adjustments through the year.
“2016 was a good year for ODC with sales up 80% from a low base in 2015. In 2016, ODC was able to supplement its sales of regular Debswana intake, with goods made available from inventory,” he said.
ODC, which has held 10 tenders in 2016, is expected to sell 15% of the production of Debswana, a joint venture between Botswana government and Anglo American’s diamond unit De Beers. Figures released by Anglo American last Friday show that production at Debswana was flat in 2016 rising by only one percent to 20.5 million carats.
While sales were significantly higher in 2016, ter Haar said average price per carats weakened to $158.78 per carat from $183.78/carat in 2015.
“The fall in average price per carat is attributable to the different mix of diamonds sold over the two periods,” he said. In the year, the average price achieved by ODC was lower than De Beers’. According to figures released by Anglo American recently, De Beers achieved an average realised price of $187 per carat in 2016, which was 10% lower than in 2015, reflecting the lower average rough price index.
ODC, which will hold 10 tenders in 2017, is expected to sell 15% 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.
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.
Looking ahead in 2017, analysts expect rough demand to improve in the first quarter as manufacturers start to ramp up production to meet resurgent polished demand. “It will be a challenge for mining companies to resist raising rough prices, but manufacturers are more determined not to overpay for rough than they used to be.
“There is also some concern rough supply will increase as various new mining projects come to fruition. Miners and manufacturers will be careful not to oversupply rough or polished to the trade, which might lead to a repeat of 2015’s rough price bubble and resultant market slump,” Rapaport said in a commentary.