De Beers to Reduce Diamond Production at Debswana

Mining and Exploration
09/12/2015 11:44

De Beers has published press release stating that it intends to reduce rough diamond production at Debswana, Botswana: "Since the start of 2015, the diamond industry has experienced a number of challenges leading to abnormally high pipeline inventories of polished diamonds, resulting in lower demand for Debswana’s rough diamonds. As a result, Debswana has revised its production for 2016 to 20 million carats to match expected levels of demand for rough. This will be achieved by producing more from Jwaneng Mine which is a high value, low cost asset and reducing production from Orapa, Letlhakane and Damtshaa Mines (OLDM). Jwaneng Mine will produce around 12 million carats whilst OLDM will produce around eight million carats. To achieve this reduction at OLDM, Damtshaa Mine will go onto a care and maintenance programme. Furthermore, Orapa Mine Plant 1(One) will produce approximately one million carats whilst maintaining plant readiness for an upswing in production should it be required. All efforts are being made to preserve jobs by re-deploying affected employees to other parts of the business."

Debswana is a major contributor to the national economy of Botswana – contributing significantly to the gross domestic product, foreign exchange earnings and government revenue. It is one of the largest private sector employers, with over 5,200 employees. De Beers expects diamond production to fall to between 26 and 28 million carats in 2016 from 29 million carats this year as the mining giant outlined its view of the “stock crisis” affecting the industry. The decline in rough and polished diamond prices has stemmed from a build-up of inventory rather than a major drop in consumer demand, De Beers said, despite the company’s estimates that the global polished diamond wholesale market contracted by 1 to 2 percent in 2015. “The crisis is not a demand crisis, it’s a stock crisis,” said Philippe Mellier, De Beers chief executive officer, in a presentation to Anglo American analysts on December 8