The diamond giant last week announced that it was developing plans against a possible slowdown or recession in global economic activity, which would impact on the demand for the precious stones.
“The high-level plan currently has no bearing on manpower, given that the voluntary separation programme was concluded at the end of 2022,” Debswana officials said on Monday in a response to BusinessWeek enquiries.
“At this juncture, this high-level plan consists of production and capital expenditure planning. “Debswana has taken proactive steps to begin putting in place contingency measures to mitigate the impact of recession on the performance of the business.” Debswana parted ways with an unspecified number of workers last year under the voluntary scheme, which came after the cessation of certain operations and a streamlining exercise designed towards business transformation and efficiency.
The officials told BusinessWeek that a recession has not materialised, but remains a high risk. Debswana, they said, remains cautious and continues to closely monitor market performance. “If there are any further adverse developments, the response plans will be progressed and finalised with input from our shareholders and implemented accordingly,” the official said. This week, more indicators from local and international experts point to the possibility of a global economic slowdown and with it, reduced demand for the rough stones upon which the country’s budget and its broader economic performance are largely reliant on.
The major drivers of the expected global recession include the fallout from Russia’s invasion of Ukraine, the effects of higher interest rates and the continuing impact of the COVID-19 pandemic.
At the World Economic Forum in Davos, Switzerland, most global leaders and economists agreed that a world economic slowdown or even recession was possible this year. Other commentators said any slowdown would not be severe, would be easily corrected by central bank and government action or would not happen at all.
In 2009, as a result of the global recession, Debswana closed several mines and shed hundreds of jobs, after demand for its production slumped. The effects of that recession have echoed through the years as executives then adopted a policy of “mining to demand,” and avoiding stockpiling diamonds, a decision that has mean production has never again returned to the plus 30-million carats per year level.
The total numbers of jobs or the density of workers required to keep the mines going, have also similarly declined since 2009 in line with the post-recession push for a leaner, more flexible Debswana capable of withstanding knocks.
