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Diamond industry on sickbed again

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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.

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.

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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Business

De Beers cuts production as Covid-19 effects set in

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In response to the Covid-19 pandemic, diamond mining conglomerate De Beers – has revised its global production guidance.

The company, which operates Debswana Mines with Botswana government in a 50/50 joint venture, revealed this week that it has cut its global production guidance by 7 million carats to reflect demand and support long-term value.

When updating the media last Thursday afternoon, De Beers – Global Sightholder Sales Executive Vice President, Paul Rowley described the pandemic as unprecedented and nothing like what the world has ever faced.

Previously, production guidance was set between 32-34 million carats for the year, but non due to the pandemic which has affected business across sectors.

Rowley told the media that the diamond mining giant is also refocusing and repurposing marketing plans to reflect a changing situation.

Furthermore, he said the group is also working with partners in government to see how to generate revenue when international customers are unable to travel adding that creating viewing centres in other countries is another option being considered as a temporary measure.

Despite the current challenges facing the diamond industry, and all other industries, Rowley said De Beers continues to make major investments across the diamond value chain to ensure the industry’s continued success during these unprecedented times.

De Beers, according to Rowley, is making investments in production capacity expansion, rough diamond distribution efficiency and downstream consumer marketing campaigns.

Rowley told journalists that Covid-19 has impacted heavily on all the three streams, being downstream, midstream and upstream.

On the downstream side, he noted that the pandemic has had a direct impact of De Beers Jewellers retail outlets due to store closures and consumer demand impact.

In the midstream, he says the pandemic has negatively affected the rough diamond sales as the third sight was cancelled due to logistical challenges as countries went on a lockdown.

The fourth sight was only attended by local beneficiation Sightholders as international buyers were unable to travel once again.

In the upstream, Rowley said operations across the globe were impacted and the group has had to implement new requirements and procedures in the workplace to keep the workers safe.

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Business

Letlole La Rona suspends CEO

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Letlole La Rona (LLR), a property company listed on the Botswana Stock Limited (BSEL), on Tuesday moved to suspend its Chief Executive Officer, Chikuni Shenjere-Mutiswa.

His suspension, according to a notice to shareholders, follows preliminary findings arising from an investigation into issues relating to the company’s Long-term Incentive Plan.

Mutiswa who was appointed LLR CEO in June 2018, is said to have been suspended with full benefits pending the outcome of the full investigations.

Commenting on the latest developments, LLR Board Chairperson, Boitumelo Mogopa noted good governance remains sacrosanct to the board and all staff of the company.

“The preliminary findings of the possible misconduct arising from the investigations relate to the circumstances around the company’s Long-term Incentive Plan during or around March this year and possible acts or omissions by an individual in a unique position of power,” said Mogopa.

Mogopa said this by no means reflects the integrity of the board, financial performance and company portfolio.

“For us, it remains business as usual as the due process takes its course,” said Mogopa.

Meanwhile, the board has in the interim appointed Botshelo Mokotedi to hold the fort on an acting basis while investigations continue.

Mokotedi is seconded from Botswana Development Corporation (BDC) – a major shareholder in LLR – where he is the Head of Risk.

He is described as a forward-thinking, highly motivated and results-oriented individual with more than a decade experience in the financial services sector across a variety of senior roles, including Business Development, Credit Analysis as well as Portfolio and Risk Management.

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