GABORONE (Reuters) -Botswana’s state-owned Okavango Diamond Company will start selling diamonds to contracted buyers next month, as it diversifies its sales channels under the government’s new deal with De Beers, managing director Mmetla Masire said on Wednesday.
ODC’s allocation in the production of Debswana – the government’s 50-50 joint venture with De Beers – was increased to 30% from 25% in the new ten-year deal signed in February, with its share to reach 40% at the end of the agreement.
A clause in the previous deal, which prevented ODC from directly competing with De Beers on contract sales, has fallen away.
“We are targeting our first sales through this channel in November, with our first two being pilot sales before we go full scale on the third,” Masire told a mining conference.
STRUGGLING DIAMOND MARKET A PROBLEM FOR BOTSWANA
Masire told Reuters in May that ODC aimed to sell about 40% of its supply through contract sales, with the balance to be sold through auctions, strategic partners and Botswana-based companies.
The global diamond market is in a protracted downturn, with demand declining amid a supply glut and the rising popularity of lab-grown diamonds weighing on rough diamond prices.
ODC in 2023 temporarily halted its rough stone sales as part of an industry-wide drive to reduce the glut. The company held an auction on September 25 but decided to hold on to its gems, citing “conditions that could have resulted in a significant negative impact on the market”.
ODC’s revenues in 2024 were about 60% of the previous year due to the downturn, according to Masire, but the company was seeing some stability in the market. Its last three auctions delivered small positive margins, up from the double-digit losses at the same time last year.
Botswana gets 30% of its revenues and 75% of its foreign exchange revenues from diamonds and the current market downturn saw the economy contract by 3% in 2024, with the IMF forecasting a further 1% contraction this year.
(Reporting by Brian Benza. Editing by Nelson Banya and Mark Potter)
