Debswana output declines q-q

Debswana, a leading local diamond producer has seen its quarter-on-quarter production taking a sharp decline, as demand for the world’ precious stones continue to plummet.

This is according to the company’s parent, De Beers, which reported this week that Debswana second quarter of the year (Q2: 2016) production has dropped by 19 percent. This means the Gaborone-headquartered company only produced 5,2 million carats during the period under review. The company, which is led by Balisi Bonyongo, is expected to produce about 20 million carats of diamonds this year. However, the company has taken drastic steps to keep afloat amid challenging economic conditions, which doesn’t come as a surprise to top executives when output falls. Orapa mine, which is owned by Debswana, reported a 27 percent decline in production during the period under review. Sensing the market was headed for a major fall, Debswana head honchos took a decision to put their smallest mine, Damtshaa, on a care and maintenance programme for the next three years starting January 1, 2016. Orapa plant No. 1 will also produce at reduced levels, until the market recovers.

Debswana is the biggest contributor to the overall output of De Beers diamond business. According to the unlisted diamond mining group, overall production also took a dive of 19 percent to close the quarter at 6,4 million. The company said the figures are ‘reflecting the decision to reduce production to prevailing trading conditions in H2 2015’Demand for diamond has been reduced on the backdrop of weak global economy and commodity crash that has affected big economies such as China, one of the emerging diamond markets. Despite all these hurdles, De Beers, which rivals Russia’s Alrosa said it has maintained total production at 26 -28 million carats for this year alone.

Last week, new broom at De Beers, Bruce Clear wrote in the company website that the industry must learn to thrive in uncertainty. He took over from immediate past Chief Executive Bruce Cleaver on the first day of July 2016. The future of the diamond sector presents both known and unknown challenges, said the former investment banker. De Beers’ success is predicated on every individual part of the diamond pipeline succeeding, which will require a braver approach from all partners in broadening horizons and accepting that solutions to the sector’s supply chain efficiencies and marketing strategies may lie outside of the sector itself, he added. He stressed that it would be folly to assume that the drivers of past demand will be the same drivers of future demand and reiterated Mellier’s guiding principle of the consumer being De Beers’ only source of value.