Cape Town, South Africa — MININGREVIEW.COM — 09 June 2008 – Botswana finance minister Baledzi Gaolathe says diamond demand is still “reasonable,” even as economic growth slows in the United States – the world’s biggest consumer of the gems.
Speaking to Bloomberg Television here at the World Economic Forum, Gaolathe pointed out that faster economic growth in Asian countries, such as China was helping to offset lower diamond sales in the United States.
Botswana – the world’s biggest diamond producer – earns about 75% of its export revenue from the gems. The government of Botswana is trying to reduce its reliance on mining by promoting investment in other industries such as agriculture and tourism,” Bloomberg reports.
“We were concerned that if a slowdown in the U.S. economy continues, demand for diamonds there would weaken,” Gaolathe said. “So far, demand is still reasonable, and we are hopeful that despite the problems in the U.S. our diamond industry will continue to sell all its production.”
Botswana’s diamond industry is run by De Beers – the world’s biggest producer of the gems – through Debswana, a joint venture with the government of Botswana. Debswana reported in March this year that diamond output would remain unchanged at about 33 million carats this year.
“The government is sticking to its economic growth target of 6.8% a year until 2016, even after oil prices rose to a record level and food costs increased,” Gaolathe told Bloomberg. The economy grew 6.2% in the year to June 2007, the most recent data available.
“It’s not our intention to revise the growth target,” Gaolathe said. “Other sectors that are not directly affected’ by rising food and energy costs will be promoting growth.”
Botswana, with a population of 1.7 million, borders South Africa, Namibia and Zimbabwe. Its Aa3 rating by Moody’s Investors Service is the highest credit rating of any country in Africa.