Anglo American Plc has posted lower diamond sales for De Beer’s second sales cycle of 2017, amounting to $545 million, and also a lower figure compared with the $617 million value of the corresponding cycle of 2016.
The 25% slump in the second sales cycle follows a strong opening to the year when De Beers, the world’s biggest diamond producer by value, sold $729 million worth of diamonds in its first sale of the year, a 70% increase from the last sale in December. The January figures were also 32% higher than the previous corresponding period when it sold $545 million.
Bruce Cleaver, CEO of De Beers, said: “We continued to see good demand across our product range in the second sales cycle, which was in line with expectations at this time of year. Sentiment remains positive heading into the Hong Kong International Jewellery Show this week–an important barometer of trade confidence.”
The Hong Kong International Diamond, Gem and Pearl Show runs from February 28 to March 2 at AsiaWorld-Expo, while the Hong Kong International Jewellery Show, which features finished jewellery, takes place from March 2 to 6 at the Hong Kong Convention and Exhibition Centre. Organizers said about 4,480 exhibitors from 53 countries were participating in the two events.
â€¨â€¨“Despite global economic uncertainties, the strong participation of exhibitors and buying missions at the shows is evidence that the jewellery industry remains optimistic about business prospects and sees Hong Kong as an important sourcing platform for jewellery and raw materials,” said Benjamin Chau, deputy executive director of the Hong Kong Trade and Development Council (HKTDC), which organizes the show.
The diamond industry is seasonal, with the holiday period from thanksgiving in November through the Lunar New Year in Asia in January or early February the busiest period for jewellery sales. January is also a seasonally busy month for the rough sector as traders and manufacturers return to the market after working down their inventories over the festive selling period. De Beers’s sales rebounded by more than 30 percent in 2016, a marked contrast to when sales fell 34% in 2015.
The mining giant holds ten Global Sightholder Sales and Auction Sales every year in Gaborone and the sights or auction sales are restricted to the top 85 customers who buy the diamond packages at a price determined by De Beers. In 2016, the diamond behemoth sold as much as $4.9 billion worth of diamonds in its ten Sightholder sales.
De Beers which is majority owned by Anglo American Plc and the Botswana government which holds 15 percent, is also the other half of Debswana, a joint venture with the government. Debswana operates four diamond mines in the country (Orapa, Letlhakane, Damtshaa and Jwaneng). Jwaneng mine is largest and most valuable mine in the world.
Diamonds are the mainstay of Botswana’s economy since they were discovered shortly after the country gained independence. The partnership between the government and De Beers is one of the longest known public-private partnerships, stretching to 50 years. The country is yet to diversify its economy away from its main export despite imminent threats in the diamond industry that include competition from synthetic diamonds, stagnated growth in leading economies and the slowdown in China that affected several commodity prices.
According to Statistics Botswana, the estimated GDP at current prices for the third quarter of 2016 was P42.7 billion compared to a revised level of P40.9 billion registered in the second quarter of 2016. The significant growth in the real Mining value added of 13.3 percent was attributed to the increase of the diamond industry value added by 9.3 percent in the third quarter of 2016 compared to a decline of 33.4 percent registered in the same quarter of the previous year. In the quarter under review, diamond production increased by 9.3 percent due to positive recovery in the global markets, particularly in the major markets for diamonds.
Strong diamond sales in 2016 have helped the country to record its largest trade balance in over sixteen years. The nation’s total exports stood at P80.2 billion against total imports worth P66.8 billion, resulting in a P13.4 billion trade surplus, a major reversal from 2015 trade deficit of P9.7 billion. Diamonds accounted for 88 percent of total exports, after shipping P70.7 billion worth of diamonds. The huge trade surplus will spur the country’s momentum as it seeks strong economic growth.
While the fourth quarter figures haven’t been released yet, the domestic economy is expected to recover and record a growth rate of 2.9 percent in 2016, and forecast to reach 4.2 percent in 2017. The optimistic outlook is based on the anticipated slight improvement in the mining sector, and positive growth prospects for the non-mining sectors.
Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.
WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.
Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.
This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time. The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.
According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.
“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.
According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.
The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.
Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.
According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.
The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.
According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.
Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.
Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.
Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.
The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.
According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.
“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.
According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.
When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.
“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.
According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.
Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.
“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.
High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.