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Diamond industry on sickbed again

Diamond industry on sickbed again

De Beers group says it will not hold its third sight which was scheduled for this week in Gaborone due to movement restrictions that have been put in place.

The announcement is a major blow, not only to the diamond industry which was on deathbed last year, but to the country’s revenue base as the country relies on diamonds for the majority of its revenue.

The diamond industry was expected to recover this year and signs began to show during the first sight of the year when rough diamond sales amounted to US$545 million which was more than US$500 million registered during the same period last year.

However, effects of Covid-19 started to show on the industry when the second sight badly performed, with sales falling by 36 percent.

Now, the diamond company will not go ahead as the world continues to grapple with the spread of the deadly Covid-19 which has claimed over 20,000 lives globally.

In their special edition report which focuses on the economic impacts of the coronavirus, Econsult firm led led by Dr. Keith Jefferis feel the country is already experiencing the effects of the global growth shutdown.

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Diamonds are the mainstay of the economy, accounting for the majority of Botswana’s exports in the process becoming government’s largest single source of revenue.

The mineral resource also makes a significant contribution to the country’s GDP. “2019 was a difficult year for the global diamond industry, with weak sales.

Nevertheless, there were signs of stabilization and recovery in December 2019 and January 2020,” Econsult economists said.

While the last sight resulted in weaker sales, it is anticipated that future sales will not be spared.

“Future sales rounds over the next few months will be further impacted by the global slowdown, as reduced demand for diamond jewellery feeds back to purchases of rough diamonds by the cutting and polishing industry and jewellery manufacturers,” Jefferis and his colleagues, Sethunya Sejoe and Kitso Mokhurutshe explained.

With this, they reckon reduced diamond sales and exports will have an impact on Botswana government revenues.

It is believed that Debswana and De Beers have already exceeded their capacity to stockpile their unsold diamond without selling any after having stockpiled last year.

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As a result of the current dynamics, economists forecast a contraction in the contributions of both diamond mining and diamond sales to GDP in 2020 which will impact negatively on growth.

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