Diamond sales improve, but De Beers remains cautious
Following a disastrous start to the year, diamond sales have started to pick up ahead of the upcoming holiday season.
De Beers’ latest rough diamond sales value for the eighth cycle indicate that there has been an impressive turnaround in rough diamond sales, even surpassing figures recorded in the same period last year.
Rough diamond sales from De Beers for the eighth cycle amounted to $467 million, an improvement from $334 million recorded in the previous cycle, even better than $297 million recorded in the eighth cycle in 2019.
The diamond sector, of which Botswana government derives much of its revenue, has been under heavy strain since last year, and the problems were further compounded by the outbreak of the Covid-19 pandemic.
The effects of the underperformance of the mining industry, especially diamonds, were documented in recent data from Statistics Botswana which showed that diamond production in carats went down by 67 percent during the second quarter of the year.
The government data collecting agency noted that diamonds are luxury goods and therefore are bound to fluctuate due to the appetite of reliable customers as the world is highly affected by the outbreak of coronavirus pandemic.
Now there seems to be light at the end of the tunnel as shown by the steady improvement in diamond sales by De Beers, which together with the government of Botswana operate in a 50/50 joint venture, Debswana.
The diamond group says owing to the restrictions on the movement of people and products in various jurisdictions around the globe, it has continued to implement a various approach to rough diamond sales during the eighth sales cycle of 2020.
This included extending the sighting event beyond its normal week-long duration.
De Beers Chief Executive Officer (CEO), Bruce Cleaver said the Group continues to see a steady improvement in demand for rough diamonds in the eighth cycle of the year, with cutters and polishers increasing their purchases as retail orders come through ahead of the upcoming Christmas holiday season.
“It’s encouraging to see these demand trends, but these are still early days and there is a long way to go before we can be sure of a sustained recovery in trading conditions,” said Cleaver.
The diamond industry remains a key driver of the local economy and for the 2021 financial period, the government had envisaged receiving P20 billion from diamond sales.
Owing to the outbreak of the pandemic, Minister of Finance and Economic Development, Dr Thapelo Matsheka, previously told the media that the ministry has since revised the figure P6.7 billion, meaning a loss of P13.3 billion.
Furthermore, he said taxes and levies from diamonds were expected to fall from P14 billion to P12 billion, while Value Added Tax (VAT) is expected to drop from P8.6 billion to P7.6 billion during the 2020/2021 financial year.