13 Nov 2023

The Okavango Diamond Company (ODC) has temporarily suspended the rough diamond sales amid market weakness reinforced by global macroeconomic uncertainty, the Managing Director, Mr Mmetla Masire, has said.

Speaking during the Absa Thought Leadership Forum on Mining recently, Mr Masire said the company has cancelled its November auction and a decision was also taken to suspend the December auction sale owing to a decline in demand for polished diamonds in the international market.

The cancellation of both auction sales, Mr Masire said, was to reduce the inventory level and reduce the supply in the market.

“We have no choice but to build up inventory as we do not want to release goods into a market which is already oversupplied, hence the need to halt the auctions,” Mr Masire said. ODC holds 10 auctions a year to sell its 25 per cent allocation of production from Debswana Diamond Company, a joint venture between Anglo American’s (AAL.L) De Beers and Botswana, in terms of the partners’ gem sales agreement.

 Mr Masire indicated that the more than five carats were selling reasonably well, in comparison to the highly valuable 1-5 carats diamonds which had recorded a drastic sales decline.

He said the sanctions imposed on Russia had far reaching repercussions in diamond trading as it triggered shortages on materials, increased costs, demand volatility and capacity constraints. Similarly, he said, both the United States of America and Chinese economies who are major consumers of the local diamonds have not fully recovered from the COVID-19 constrains which also had a tall order on diamond sales.

Mr Masire said the laboratory produced diamonds (synthetics) also posed a big threat to the natural diamond market as they have captured a huge percentage of the market.

“The natural diamonds occupied 80 per cent of the market in 2021 while synthetics only occupied 20 per cent but the former has since lost the market dominance as both products are currently having an equal market share,” he said.

 Mr Masire added that he was optimistic for the markets to improve during the second quarter of next year.

Meanwhile, according to a report by Bank of Botswana the sale of rough diamonds at Debswana Diamond Co declined by 17 per cent between January and June this year.

Debswana produced about 24 million carats last year, with ODC getting an allocation of about 6 million carats.  ENDS