Sales of rough diamonds at Debswana Diamond Company fell 21% in the nine months up to September, Botswana’s central bank data on Tuesday showed, as demand for gems slowed amid global economic uncertainty.
Debswana, equally owned by Botswana and Anglo American’s De Beers, sells 75% of its output to De Beers while the balance is taken up by state-owned Okavango Diamond Company (ODC).
Botswana and De Beers in June agreed a new ten-year diamond sales agreement, which will raise ODC’s share of Debswana output to 30% before it goes up to 40% in five years and eventually 50% by the end of the new contract.
But 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 up to September, Debswana sold diamonds worth $2.811-billion, down 21.4% from $3.578-billion sold 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 in the period.
While Debswana sales have been affected by weak global consumer demand, the company has not cut back production, with figures released by Anglo American last week showing the joint venture’s output edged up 1% in the nine months, to 18.5-million carats compared to same period last year.
Analysts at research firm Econsult said expanding production during a period of weak consumer demand will not be sustainable.
“It will not be possible to continue expanding mining with sales contracting, as the required stockpiling becomes increasingly expensive,” the research firm said in an Oct.31 note.