Things are not so good for the leading diamond producer De Beers as sight holders refused about half of their allocated supply last week, reducing the estimated value of rough sold at the sight to $200 million.
The move extends a trend of refusals from previous months, turning the mood at the event somber even though the mining company kept prices stable. At the previous sight in August, De Beers allowed sight holders to defer up to 75 percent of allocated supply whilst cutting prices by 8 percent to 10 percent. The company also allowed sight holders to re-phase their in-plan allocations for the six sights from October to the end of the current contract year in March.
Reports indicate that rough trading on the secondary market was “extremely quiet” following the sight and boxes sold at a discount to De Beers list prices after additional costs such as value-added services and broker fees.
“The mood is the worst I’ve seen over the past few sights,” Harari said. “It’s no longer just a question of price; there are no buyers for polished and only demand for a few items, according to Guy Harari, chief executive officer of Bluedax, an online rough trading brokerage”
Polished prices dived in September, with the RapNet Diamond Index (RAPI™) for 1-carat GIA-graded diamonds sliding 3 percent for the month and 6.3 percent in the third quarter.
De Beers reduced prices in August but it wasn’t enough because polished prices continue to fall. Diamond brokers have noted that there are enough polished goods for the season. “There’s no point in buying rough when you can’t make a profit,” one broker stated.
Sight holders were unsurprised as De Beers kept prices stable in October even though they struggled to garner a profit from its supply of rough diamonds.
“The main concern in the market is no longer prices. It is a lack of buyers for the polished that’s worrying,” said an Antwerp-based sightholder. He would rather see rough prices remain stable until the end of the year as another bout of cuts may result in a further drop in polished prices.
“We need to wait and hope that end-of-year sales are strong and that China comes back into the market – even if that seems unlikely at this point,” the Antwerp sight holder said. “Right now, there are plenty of goods on the market and no confidence to buy.”
Okavango Diamond Company, the Botswana parastatal which is entitled to sell 14 percent of Debswana’s production, has sold reduced volumes in response to market conditions. Okavango only offered diamonds in the 10-plus carat range at its October auction and has canceled its sale in November.
In the midst of falling prices and higher inventory levels, some traders spotted better buying opportunities on the auction and tender circuit. One manufacturer reported that prices of 3 to 6 grainer rough –which are generally cut into 0.25-carat to 0.40-carat polished offered by Petra Diamonds dropped by around 17 percent at its October sale as the goods couldn’t sell at the previous high prices.
The value of rough diamonds exports from Botswana's mines continues to fall. In the first six months of the years rough diamonds exports fell 15 percent in the to $1.7 billion, official data showed.
Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.
According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.
The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.
Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.
Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the companyâ€™s market capitalization.
Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana. Â The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.
African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).
AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.
The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.
To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. â€śOur wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,â€ť said BĂ¸rge Brende, President, and World Economic Forum. â€śThe Forumâ€™s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.â€ť
Given the continentâ€™s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. â€śThe promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,â€ť said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.
The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.
â€śMacro trends in the four key sectors and across Africaâ€™s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,â€ť said Wamkele Mene, Secretary-General, AfCFTA Secretariat.
The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.
About the World Economic Forum Annual Meeting 2023
The World Economic Forum Annual Meeting 2023 convenes the worldâ€™s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,
Electricity generation in Botswana during the third quarter of 2022 declined by 15.8%, following operational challenges at Botswana Power Corporationâ€™ Morupule B power plant, according to Statistics Botswana Index of Electricity Generation (IEG) released last week.
The index shows that local electricity generation decreased by 148,243 MWH from 937,597 MWH during the second quarter of 2022 to 789,354 MWH during the third of quarter of 2022.
This decrease, according to the index, was mainly attributed to a decline in power supply realized at Morupule B power station. The index shows that as a result of low power supply from the plant, imported electricity during the third quarter of 2022 increased by 76.3 percent (123,831 MWH), from 162,340 MWH during the second quarter of 2022 to 286,171 MWH during the current quarter and Statistics Botswana added that the increase was necessitated by the need to augment the shortfall in generated electricity.
In the index Statistics Botswana stated that Eskom was the main source of imported electricity at 42.0 percent of total electricity imports. â€śThe Southern African Power Pool (SAPP) accounted for 38.4 percent, while the remaining 10.1, 9.1 and 0.5 percent were sourced from Electricidade de Mozambique (EDM), Cross-border electricity markets and the Zambia Electricity Supply Corporation Limited (ZESCO), respectively. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity from neighbouring countries such as Namibia and Zambia.â€ť
The government owned statistics entity stated that distributed electricity decreased by 2.2 percent (24,412 MWH), from 1,099,937 MWH during the second quarter of 2022 to 1,075,525 MWH during the third quarter of 2022. The entity noted that electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 85.2 percent during the third quarter in 2022 and added that this gives a decline of 11.8 percentage points. â€śThe quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed decreased by 11.8 percentage points compared to the 85.2 percent contribution during the second quarter of 2022.â€ť
Statistics Botswana meanwhile stated that the year-on-year analysis shows some improvement in local electricity generation. Recent figures from entity show that the physical volume of electricity generated increased by 36.3 percent (210,319 MWH), from 579, 036 MWH during the third quarter of 2021 to 789,354 MWH during the current quarter. According to Statistics Botswana electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 57.7 percent during the same quarter in 2021. This gives an increase of 15.7 percentage points.
The entity noted that trends also show an increase in physical volume of electricity distributed from 2013 to the third quarter of 2022, thereby indicating that there are ongoing efforts to meet the domestic demand for power. â€śThere has been a gradual increase of distributed electricity from the first quarter of 2013 to the third quarter of 2022, even though there are fluctuations. The year-on-year perspective shows that the amount of distributed electricity increased by 7.2 percent (71,787 MHW), from 1,003,738 MWH during the third quarter of 2021 to 1,075,525 MWH during the current quarter.â€ť
The statistics entity noted that year-on-year analysis show that during the third quarter of 2022, the physical volume of imported electricity decreased by 32.6 percent (138,532 MWH), from 424,703 MWH during the third quarter of 2021 to 286,171 MWH during the third quarter of 2022. â€śThere is a downward trend in the physical volume of imported electricity from the first quarter of 2013 to the third quarter of 2022. The downward trend indicates the countryâ€™s continued effort to generate adequate electricity to meet domestic demand, hence the decreased reliance on electricity imports.â€ť