Thursday, July 18, 2024

ODC relishes at prospect of selling more Debswana diamonds

State owned Okavango Diamond Company (ODC) has indicated its readiness to expand capacity in a bid to match the likelihood of receiving more diamonds from Debswana, another diamond company where government has a stake. 

Botswana and De Beers are currently logged over negotiating a new sales agreement that could see more of diamonds from the Debswana sold through ODC. Under the current sales agreement between the two parties, which comes to an end in June 2023,  75 percent of the Debswana mines diamonds are sold by De Beers while the remaining 25 percent is handed to ODC to sell on behalf of Botswana.

ODC Managing Director Mmetla Masire told Sunday Standard that the state owned company has demonstrated beyond reasonable doubt that it can handle sales as evidenced by what happened when the stake was upped from 15 to 25 percent. 

“We were told by government that we are moving up from 15% to 25% and we did what was necessary to handle the jump and I must say that whenever we are given an allocation, whether it is an upward allocation or a downward allocation ODC ensures that there is enough capacitation,” he said.

Masire highlighted that ODC is evidently performing exceptionally well adding that last year they were able to generate over 1 billion US dollars in sales revenue.

“We have our customer base increase and it should be noted that half of the problem is not that we do not have customers, it is just that we do not have enough diamonds, so ODC generally sells allocation and when have sold our allocation we simply tell our customer base that what we had has ran out,” said Masire.

He said ODC has committed itself towards ensuring that the country’s natural diamonds is marketed enough to generate revenue adding that failure to do so will give buyers the impression that they can go for the alternative.

“ODC was established to serve the interests of government and that is exactly what we continue to do and that is why we are always ready to implement whatever that government suggests,” added Masire.

He said they are looking forward to a positive year as the new financial year is set start next month.

 “The diamonds recovered quickly before Covid-19 situation improved, so last year as you know we did very well as a company and as an industry and this year started very good but what we are starting to see now is the drop in prices although we are still profitable but we have seen a decline in the last 3 sales,” said Masire.

Masire further said their assessment has revealed that there are 3 factors which have led to the decline of diamond sales.

He said the increase in inflation rate across the world can be attributed to the decline in diamond sales also adding that the Ukraine-Russia war has also thrown the economic into hardships.

“The inflation rate has increased owing to the Russia-Ukraine war and this has left many economies struggling as you can also see with the high food prices even locally and some diamond buyers may be facing a recession very soon,” he said.

Masire stated that another factor is that owing to the high purchase early last year saying that some people’s money is still locked up in stock as some buyers failed to process the stock and sell.

RELATED STORIES

Read this week's paper