Debswana output grows

SHARE   |   Wednesday, 01 March 2017   |   By Kabelo Adamson
Debswana output grows

Debswana Diamond Company – a joint venture between government of Botswana and De Beers - registered a slight increase in output in 2016, De Beers reported this week. Debswana mines include Jwaneng mine, Orapa, Letlhakane and Damtshaa. The latter has since been placed under care and maintenance. De Beers – a unit of mining conglomerate Anglo American and responsible for selling a larger portion of rough diamonds from Debswana mines to a selected buyers known as sightholders – has seen an increase from the local mines offset by fall in production from mines in South Africa and Namibia. The local mines produced a combined output of 20.5 million carats in 2016 which was maintained at the levels of 2015 of 20.2 million carats. The majority of those were from Jwaneng mine where production increased by 23 percent as a result of higher tonnes treated. Going into 2017, production is expected to go up at Jwaneng as Cut-8 project comes into full swing. By end of 2016, it is reported that 85 percent of the 500 million tonnes of waste stripping required to expose the ore had been mined through the project and ore processing from the plant is scheduled for the first half of this year. Cut-8 is expected to be the main source of ore from next year, 2018.

In Namibia where De Beers operates Namdeb Holdings in a similar manner as Debswana, recorded a decrease in production of 1.6 million carats from 1.8 million carats produced in 2015. De Beers production in 2016 totaled 27.3 million carats, a decrease from 28.9 million carats produced in the previous year but revenue for the group was able to grow by 30 percent to $6.1 billon, driven by higher rough diamond sales, which increased by 37 percent to $5.6 billion. The company says this was attributable to a 50 percent increase in consolidated sales volumes to 30 million carats, partly offset by a 10 percent decrease in the average realised rough diamond price to $187/carat. In 2016, trading conditions in the industry are said to have showed an improvement compared to the year before as seen in the 42 percent increase in Earnings before interest, tax, depreciation and amortization (EBITDA). EBITDA went up to $1.4 billion from $990 million the previous year – a result of higher revenues from stronger diamond demand which led to reduced inventory levels. In addition to the trading conditions, results were also favoured by cost-saving programmes, portfolio changes and favourable exchange rates.

According to De Beers Executive Head of Strategy and Corporate Affairs, Gareth Mostyn consumer demand in 2016 was in line with demand in 2015 due to many challenges such as political changes and economic upheavals around the world.
He, however, said demand for diamonds remains robust and that America will continue to drive demand. “We believe the US will continue to be the main source of growth and we think that due to medium term prospects we will continue to see growth in India and China,” Mostyn said on Tuesday as he announced the company results, maintaining that they remain optimistic about the year ahead. Mostyn said the diamond sector in general and for Botswana specifically looks encouraging but called for caution going forward.