Rough diamond sales by Debswana Diamond Company fell 21% in the nine months to September, Botswana’s central bank said on Tuesday, as demand for gems slowed amid global economic uncertainty.
Debswana, which is equally owned by Botswana and Anglo American Plc’s De Beers, sells 75% of its output to De Beers, with the rest going to state-owned Okavango Diamond Company (ODC).
In June, Botswana and De Beers agreed a new 10-year diamond sales deal that will see ODC’s share of Debswana’s output rise to 30% before rising to 40% in five years’ time and finally to 50% by the end of the new contract.
However, both ODC and De Beers have experienced lower demand, with the state-owned company cancelling its November auction, while the Anglo unit has allowed its contracted buyers to defer up to 100% of their contracted purchases for the remainder of 2023.
In the nine months to September, Debswana sold $2.811 billion worth of diamonds, down 21.4% from $3.578 billion in the same period last year. In Pula terms, the decline in sales was lower at 14.3% to 37.055 billion Pula ($2.72 billion), reflecting a stronger US dollar during the period.
While Debswana’s sales have been hit by weak global consumer demand, the company has not cut back on production, with figures released by Anglo American last week showing that the joint venture’s output for the nine months was up 1% on the same period last year to 18.5 million carats.
Analysts at research firm Econsult said expanding production at a time of weak consumer demand was unsustainable.
“It will not be possible to continue to expand mining with declining sales as the required stockpiling becomes increasingly expensive,” the research firm said in a note on 31 October.
