Gaborone, Botswana — MININGREVIEW.COM — 31 March 2009 – Botswana – the world’s biggest diamond producer – expects sales of the gems mined in the country to plunge by half this year, and prices to fall as much as 20%, as the global economic slump slashes jewellery demand.
“Sales are going to be sluggish, but not as bad as the last quarter of 2008,” Nchidzi Mmolawa – director of mineral affairs at the Ministry of Minerals, Energy and Water Affairs – said here in an interview with Bloomberg News. Debswana Diamond Company – the joint venture between De Beers and the government of Botswana – sold almost nothing in last year’s final two months,” he added.
Bloomberg News reports that the worldwide economic slowdown has forced even the wealthiest shoppers to spend less. Signet Jewellers Limited – the world’s largest jewellery-store owner – reported a loss this week as sales continued to wilt. Debswana – producer of a fifth of the world’s diamonds – announced last week that all of its four mines would close until at least April 14 because of weaker demand.
“When this crisis started last year, we thought it was only the financial sector that would be impacted,” said Mmolawa. “I don’t think anyone expected it would hit the mining sector as much as it did.”
Still, sales at Debswana have improved by a marginal amount in the current quarter from the final months of 2008, according to Mmolawa. The company’s mines account for 70% of Botswana’s exports.
The director said he was confident that Debswana would resume production next month at two mines – including Jwaneng, the world’s biggest – as it ran down its stockpiles of gems.
“Diamonds generate about half of the Botswana government’s revenue, and the slump in exports will push the budget deficit to about 10% of gross domestic product in the year beginning 1 April,” finance minister Baledzi Gaolathe said here in a separate interview.
“Still, the government expects the economy to expand this year, or at worst post zero growth, as construction, tourism and other industries help to offset the downturn in mining,” the minister added.