Diamond Trading Company (DTC) Botswana punched-the-air on Friday at the straight “favourable” marketing conditions experienced so far during the second quarter year, adding that it is more optimistic of the last sight that falls due within a week.
“The ninth sight was quite favourable and hope that the tenth (last) one would be more favourable,” spokesperson for DTC Botswana, Kago Mmopi, said.
“Normally, this is the time for polishers to buy,” he said, adding that “whatever happens next month is likely to set the trends for next year’s performance”.
DTC Botswana’s jubilant mood is also boosted by the sales made by DTC London in the ninth sight, which was the best this year ahead of Thanks Giving in the US and Christmas shopping.
The rough diamond sales took a nose-dive during the fourth quarter of last year owing to the international economic crisis sparked by the sub-prime mortgages in the United States of America.
Since the beginning of the second half there has been a “gradual improvement” in sales of rough diamonds, however, sales are not expected to be more than 50 percent of what was sold in the past year.
The global economic downturn has had a ripple impact on the diamond industry and the mineral dependant countries such as Botswana. The move has forced Botswana’s biggest diamond mining company, Debswana, to cut back on production while other small miners were forced to shut-down.
“We still believe that we will make half of what we made last year, given the fact that DebswanaÔÇö DTC Botswana’s sole supplier of rough– had to scale-down on its production,” Mmopi said.
At its inception, DTC Botswana was slated to do rough diamond sales to the tune of US $ 370 million in the first year and graduating to US $ 500 million this year. But both plans were blighted by the credit crunch.
Last month, The Economic Review, which is compiled by Keith Jefferis, chairman of Bifm Investment Committee and the brainchild behind a consultancy group, Ecosult, pointed out that diamond exports in the three months to June averaged between P 1.58 billion per month just shy of the P 1.75 billion per month recorded in a similar period last year.
“During the three months from April to June, diamond exports averaged P1.58 billion a month, not far below the monthly average of P 1.75 billion during the comparable period in 2008,” the Economic Review said.
The observation is not far from what Debswana Diamond Mining Company has stated as early as September, saying it is “beginning to see some physical increase in the purchase of the goods” though it believes that earnings will half of what it realized last year.
Debswana Diamond CompanyÔÇöthe country’s biggest foreign revenue earner ÔÇô said this earning for full year to December this year– are likely to be lower by 50 percent compared to the previous year.
“We are doing 50 percent (in terms of sales) of what we did in 2008. And by the end of this year we will be tracking somewhere around 50 percent,” Debswana’s head of finance, Tabake Kobedi, has said.
Debswana accounts for 33 percent of GDP and over 50 percent of government revenue ÔÇôand since late last year it has not been able to sell its production at full capacity owing to the impact of international economic downturn.
Debswana, which is the world’s leading diamond operator by value, operates four mines of Damtshaa, Jwaneng, Lethakane and Orapa.
The sluggish demand forced the company to shut-down some of its operations for the first four months of the year while others have been suspended for 12 months. The severity of the jaded diamond demand exposed government’s failed attempts to diversify the economy.