Debswana Managing Director Balisi Bonyongo says though the company’s EBIDTA improved in 2016 the environment still does not guarantee that the company relax. The company’s EBITDA improved by 40% over 2015, a very significant improvement when compared to the period 2014/15 which recorded a decline of 37%. “2016 was a different year than 2015, but we can’t be comfortable,” he said. Speaking at the company’s business performance update to stakeholders on Tuesday this week in Gaborone, Bonyongo said due to continued strong US consumer demand, the rough diamond market stabilised and midstream sentiments improved. The strong rough diamonds demand, according to Bonyongo, reflects improved trading conditions. The strong rough diamond demand from the US market which Bonyongo described as mature has given Debswana a chance to start distributing. Higher revenues from stronger rough diamond demand, improvement in cost and operational efficiencies, favorable exchange rate lead to an improved EBITRA. He revealed that in 2016, Debswana produced 20.5 million carats of diamonds as compared to 20.4 million carats in 2015 and 24.2 in 2014. The Carats produced remained in line with 2015 production at 20.5 million carats. “This is as a result of our strategy to produce to demand by maximising production at our core assets and scaling down at our lower value, lower margin assets. For this reason Damtshaa mine remains on care and maintenance,” he said.
According to Bonyongo, by focusing on operational efficiencies and other cost containment opportunities, management saved a total of P1 billion in 2016. Meanwhile the Debswana MD revealed that the first three sales cycles of the year have gotten of a good start with $729m sale made in the first cycle, $553m in the second cycle and $580m. With the macro-economic conditions underpinning consumer demand for diamonds remaining broadly stable and midstream stocks returning to more typical levels in 2016, rough diamond demand is expected to normalise in 2017. However Bonyongo warned that 2017 global growth is dependent upon a number of macro-economic factors including: the policies of new administration in the US, the strength of the US dollar impacting consumer demand, economic performance in China and effects of Indian demonetisation. According to Bonyongo, the US is expected to continue to be the main driver of global growth in 2017. “The diamond Industry is likely to face continued sales and price volatility; therefore we must: maintain operational flexibility, drive costs and operational efficiencies and improve planning and forecasting,” he said.