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Diamond exports rebound in first quarter

03/5/2012 04:14:46

Diamond exports rebound in first quarter

The March figure brings the value of diamond exports for the first quarter of 2012 to approximately P6 billion.

At that level, the first quarter figures are marginally lower than the P6.2 billion for the fourth quarter of 2011 but still represent the strengthening of diamond exports following a three-month slump that began last November.

In January, the height of the slump, diamond exports were measured at P806 million, as the key markets of the US and the Eurozone battled economic shocks which manifested themselves as weaker demand for the precious stones. On Monday, the Bank of Botswana released encouraging data indicating that the first quarter diamond export figures are comparable to the first quarter of 2008, the last of the "boom years" before the global recession in 2009.

The trend in exports also vindicates the optimism expressed by leading global diamond sector players on the direction of the industry in 2012, particularly with respect to rough diamond prices. "The market for rough diamonds has continued to improve following the correction to prices in September 2011," Gem Diamonds said in a recent statement.

"The Gem Diamonds Price Index has shown increases in every sale since this correction and is up some seven percent in 2012. Gem Diamonds anticipates rough prices across the market to continue increasing into the second quarter of 2012 and, despite the relatively thin volumes being traded in the polished market in high end goods, prices in these goods both in the polished wholesale market and high end branded auctions are expected to improve further."

De Beers Botswana CEO, Neo Moroka, recently told Mmegi Business that the demand for diamonds has been strong at the sights or auctions held by the Diamond Trading Company Botswana (DTCB) since the beginning of the year. He said the sales were positive despite the fact that cutting and polishing firms still had stockpiles of diamonds from sights held last year.

"Sales have been very good," Moroka said. "Due to the downturn at the end part of last year, companies have been getting rid of the stockpiles and when the industry is selling off stockpiles, the performance is not usually good. But much to our surprise, our sights in the first quarter of the year have been above expectations, although not as good as the first quarter of 2011 which was exceptional." Moroka also said rough diamond prices were expected to trend upwards this year, based on the strong demand coming out of China, which is now the second largest consumer of the precious stones after the US.

The trends in Botswana diamond exports as well as the forecasts by industry players are at odds with part of the statements made by Firestone Diamonds' executives when suspending the BK11 diamond mine in February.

At the time, Firestone Diamonds CEO, Tim Wilkes, said besides operational challenges, the suspension of BK11 was "due to current weakness in the diamond market".

In contrast, another diamond mine near BK11 known as Karowe, recently announced the recovery of over 5, 300 carats as part of its ramp up to full operations in June. Karowe's proprietor, Lucara Diamonds, says it expects to sell 300,000 carats from the mine in 2012, recently clinching P187 million revolving credit facility from Bank of Nova Scotia to finance operations and further development of the mine in diamond rich Boteti district.

Dikgang Publishing Company (DPC)

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