First quarter diamond exports near P6bn

MBONGENI MGUNI
Staff Writer | Thursday May 2, 2013 00:00

Bank of Botswana figures released yesterday indicate that exports attributable to the country's two producers of rough diamonds, Debswana and Lucara Diamonds, ranged from P2.6 billion in January to P1.5 billion in March.Operations at the country's other diamond mines, Firestone's BK11 and Mantle's Lerala, are currently suspended due mainly to operational and market-related issues.

Available figures indicate that Lucara Diamonds' Karowe Diamond Mine sold 144,712 carats in the first quarter of the year, earning US$32.5 million (P266.5 million). By comparison, Debswana, which owns the world's richest mines, produced 4.54 million carats over the same period.

Debswana's production figures represented an eight percent drop from the corresponding period in 2012, while Lucara has no comparative period for Karowe as commercial production began in July 2012.While the first quarter export figures are marginally higher quarter-on-quarter, they represent a four percent drop from the first quarter of 2012 and a 15 percent fall from the same period in 2011.

The trend supports diamond producer's forecasts of uncertainty in 2013, due to the prevalence of competing factors in major markets and the vicissitudes of the global economy.However, most commentators agree that first quarter rough diamond prices were firm, supporting production at mines worldwide.

Lucara CEO, William Lamb said the new producer had a successful first quarter at Karowe, as it was also able to sell 18,233 carats it had held over from its December auction. The stones were held over due to 'low volumes of competitive bidding' last year.

'I look forward to 2013 being another outstanding year for Lucara,' Lamb said in a recent operational update where he also announced that Karowe would target production of 400,000 carats this year up from 303,000 in 2012.Gem Diamonds' CEO, Clifford Elphick, also noted improved prices in the first quarter, although the global producer was unable to fully capitalise on these. In Botswana, Gem Diamonds is developing the Ghaghoo Mine near Gope.

'Rough diamond prices have improved over the quarter, but this is not reflected in our results because of the lower quality diamonds mined so far this year,' he said in a recent first quarter update.De Beers's executive vice president global sightholder sales, Varda Shine told Mmegi Business the global giant expected consumer demand to grow at a 'modest pace' this year. As in other sectors, rough diamond production generally follows demand, with producers such as Debswana specifically anchoring output to demand.

'Consumer demand last year grew by three percent which was great as 2012 was a tough year,' she said in an interview last week.'This year, we expect it to be better although we do not yet know by how much. The US has started the year well while the results of some listed retail companies are positive.

'We believe that China will also improve during the year. Altogether, we expect demand to continue growing but at a modest pace and this is the new world we live in.'Shine said the global producer was still measuring the various factors required to forecast the performance of the diamond retail market this year.