De Beers weighs options for locked out diamond buyers

news-image

Mpho Tebele

GABORONE>>Diamond giant De Beers is examining several options after its customers were blocked from travelling to Botswana where it conducts its annual rough diamond sales.

This follows a decision by the Botswana government to impose travel restrictions on high risk countries hit by coronavirus in an effort to control and minimize the spread of the virus. Among the countries included in the list are China, India and Belgium where the majority of De Beers customers are based.

 De Beers External Affairs Manager, Kesego Okie said in an interview that as with many industries around the world, the various restrictions that have been put in place on the transportation of people and products in response to COVID-19 have created challenges to the company and its customers.

“With our rough diamond sales all taking place from southern Africa, the restrictions on travel and transport in the region have had a direct impact on our ability to carry out business as we normally would, as customers have been unable to attend our sales, and the shipping of products has been similarly affected,” she said.

De Beers sorts and sells its diamonds in Botswana through its joint venture with the Botswana Government called Debswana and it owns four diamond mines in the country.

Okie said they have been fully focused on undertaking a flexible approach to doing business and they continue to seek innovative ways to meet their customers’ needs during this period.

She said their customers come from all around the world, and different parts of the globe are experiencing different stages of development in their response to the pandemic.

“In China, for example, we are seeing society reopening  and consumers experiencing a return to normal life and we are maintaining a close watch on developments across the globe. Meanwhile, as time goes on we are able to explore more options regarding the transport of products that will enable us to support our customers’ evolving needs more effectively,” she said.  

Okie said De Beers was also working hard on making sure it is ready to support the recovery of operations fully when it comes. “This recovery will be important not only for our own business, but for the communities who rely on our operations for vital services, and for the national economies to which diamonds contribute substantially,” she said.

Commenting on the latest development, Botswana based diamond trader, Maclean Letshwiti said although current mobility and restrictions are meant to contain or minimize the spread of the virus, it presents the diamond industry with previously inconceivable challenges, diamonds are luxury products as such customers consuming these products are mobile.

“Even manufacturers of these products are also immobilized when restrictions are implemented, a lot comes to a halt. Sight holders cannot procure rough diamonds used in manufacturing , finished goods cannot be shipped to customers hence no revenue and manufacturing stops,” said Letshwiti.

He added that “when revenue cannot be generated, liabilities may not be honoured, even wages might not be paid, many employees in the industry will go hungry and will not be able to earn a living. Some employees may not be able to return to work when restrictions are lifted due to death and financial constraints.” Letshwiti said while  these are localized challenges, the industry at large cannot recover overnight adding that luxury goods will be the last   sector to recover when the economy starts recovering.

“Consumers with surplus cash will be few, hence cash will be limited and luxury goods such as diamonds will continue to suffer from depressed sales,” he said.

Meanwhile Finance Minister Thapelo Matsheka has said that Botswana's economy will shrink by around 13 percent due to the impact of the coronavirus on the diamond industry. He shared the same sentiment with De Beers that, “due to travel restrictions, we expect to see the mining sector contracting by 33 percent in 2020 with diamond revenues falling to BWP 6.7 billion (about $670 million) from the original forecast of BWP20 billion about $2 billion).”

This development has great significance to Botswana which is the biggest diamond producer in Africa and the second largest in the world after Russia as at 25 April, registered 23 corona virus cases out of which five have been discharged and one death. According to the World Bank, Botswana is heavily dependent on its diamond resources which accounts for 25 percent of the southern African nation’s GDP; approximately 85 percent of exports earnings and about one-third of the country’s revenues. 

 

LEAVE A COMMENT

Comments

image

Poachers have broken into Botswana’s p Read more...

10 Aug, 2018 at 01:58 PM

image

In a sign that Botswana is likely to cli Read more...

02 Jul, 2018 at 09:26 AM

image

DAR ES SALAAM - DIRECTIVES on online for Read more...

02 Jul, 2018 at 01:24 PM

image

Gaborone - Poachers have broken into Bot Read more...

04 Feb, 2019 at 07:35 AM

image

SADC leaders meeting in Tanzania this we Read more...

19 Aug, 2019 at 01:51 PM

image

Harare Southern Africa and the world at Read more...

23 May, 2020 at 01:32 AM

image

SADC states have been urged to support M Read more...

23 May, 2020 at 01:30 AM

image

Windhoek - The Southern African Developm Read more...

23 May, 2020 at 01:28 AM

image

Lusaka-AFRICA has the capacity to make b Read more...

23 May, 2020 at 01:25 AM

image

GOVERNMENTS in Southern Africa are battl Read more...

23 May, 2020 at 01:23 AM

image

Lusaka - Amid myriad criticisms from soc Read more...

14 Dec, 2018 at 06:28 AM

image

Windhoek – Namibia’s economic outloo Read more...

29 Oct, 2018 at 02:13 PM

image

FORMER Liberation Movements (FLMs) in So Read more...

16 Sep, 2019 at 12:36 PM

image

Heads of state and ministers who travell Read more...

30 Jul, 2018 at 02:01 PM

image

Windhoek - The European Union National I Read more...

01 Apr, 2019 at 12:33 PM