Following a positive start to the year, the global impact of COVID-19 and the subsequent restrictions on the movement of both people and goods has had a major impact on wholesale demand for both rough and polished diamonds, and consumer demand for diamond jewellery, De Beers has indicated.
Briefing the media via a virtual platform on Thursday, Executive Vice President Diamond Trading, Paul Rowley and Executive Vice President- Corporate Affairs, David Prager gave a business update on the operations of the world leading diamond producing company, by value and volume.
“While lockdowns are now beginning to ease in some countries, a return to ‘normal’ activity appears some way off, as other countries have yet to see a peak, and concerns of further waves of infection persist,” said Rowley.
Rowley said the Covid-19 pandemic has been a challenge in the sense that it has affected the world in an unprecedented manner, having an overarching international impact, affecting multiple industrial sectors as well as impacting the entire value chain of mining business, from mine to retail.
“Unlike previous economic shocks, Covid-19 has a combination of health, social and economic challenges and considerations. International responses have led to difficulties not only with demand conditions, but several other factors,” Rowley told Botswana media.
“Such a challenge requires a unique response, traditional approaches to business are ineffective. A range of considerations must be balanced with commercial activity. Flexibility and adaptability are key.”
CONSUMER DEMAND IN KEY MARKETS DURING PANDEMIC
The United States lockdown has led to severely reduced consumer demands in the market representing around half of De Beers’ global demand. “Some States in the US are now relaxing lockdown restrictions but most stores remain closed and demand heavily impacted,” he said.
“Meanwhile China, which is the second biggest market for lockdown restrictions severely impacted retail sales in second largest global market. Most stores are now open again. Consumers returning are encouraging signs, but still below former levels.”
In India the ongoing lockdowns across the country continue to have a significant impact on demand. With the vast majority of the world’s diamonds being cut and polished in India, the lockdown there saw midstream demand grind almost to a halt.
Restrictions on international travel and shipping also saw trading activity dry up in key centres. Mines across the world have seen operations paused or stopped.
There are questions regarding whether some operations will return at all after the pandemic. With those mines that are operating, there remain significant logistical challenges and operations are at a reduced level, Rowley indicated.
Direct impact on De Beers Jewellers retail outlets as result of store closures and consumer demand impact, resulting in indirect impact through the value chain as impact on consumer demand ripples through pipeline. Forevermark business has been impacted as jeweller partners were impacted by store closures and consumer demand.
Meanwhile there has been a substantial impact on rough diamond sales; Sight 3 not held in light of logistical challenges related to lockdowns in Botswana, South Africa and India while Sight 4 was only attended by local beneficiation Sightholders as international customers were unable to travel.
Operations across the globe impacted due to requirements to implement different working practices and procedures to keep our people safe but mines are now operating again, albeit at reduced levels.
DE BEERS RESPONSE: FLEXIBILITY IS KEY
In response to the Covid-19 which has affected De Beers’ business, the mining giant has committed to implementing changes to regular customer commercial arrangements including; 100 percent deferrals, additional buybacks, extended sales windows beyond Sight Weeks.
De Beers will also work with partners in government to see how the company can generate revenue when international customers are unable to travel. The group considers focusing on viewings in other centres as a temporary measure
The company will also move to reduced global production guidance by 7m carats to reflect demand and support long-term value as well as refocusing and repurposing marketing plans to reflect changing situation – timing, targeting, product types and messaging.
On Thursday, company leadership indicated that it is impossible to provide a detailed outlook as so much depends on the progress of the virus and government responses. “However, early indications from places that have reopened suggest demand can recover quite quickly,” said Rowley.
De Beers said despite the challenges, the company continues to make major investments across the diamond value chain to ensure the industry’s continued success during these unprecedented times
The mining giant is making investments in production capacity expansion, rough diamond distribution efficiency, as well as downstream consumer marketing campaigns.
The company said it will be leading the recovery and reinforcing how diamonds will continue to have a key role to play in people’s lives after the lockdowns through our consumer engagement activities. “We are focused on returning to business as usual in our Botswana home as soon as is possible,” said Prager
During the questions and answers, De Beers declined to reveal the extent of financial losses during the imposed lockdown in key markets but indicated that the impacts were devastating across all business streams.
De Beers is 85 percent owned by Anglo American and 15 percent owned by the Government of the Republic of Botswana. De Beers’ two primary mines in Botswana, Jwaneng and Orapa represent 92% of the nation’s diamond output by value, with Jwaneng Mine being the most valuable diamond mine in the world.
Gaborone Private Hospital (GPH) has come out with guns blazing after they were accused of releasing false positive Covid-19 results which were later declared negative by the government task team force.
GPH insists that it is beyond doubt that their 8 positive Covid-19 results were indeed accurate.
This publication is in possession of a report that indicates how the government might have faulted with their results. They narrate what might have caused the various results between laboratories.
The report indicates that one or more negative results do not rule out the possibility of Covid-19 virus infection. Furthermore a number of factors could lead to a negative result in an infected individual.
GPH is immovable in their results and believe that poor quality of the specimen containing little patient material (as a control, consider determining whether there is adequate human DNA in the sample by including a human target in the PCR testing) could be a factor in diagnosing whether the case reads positive or negative.
The hospital, in the report shared internally, also point out that another factor may be as a result of the mishandling and incorrect shipping of the specimen. The report also establishes that technical reasons inherent may be one of the reasons why results may vary.
This publication has also established that same test kits were used but with different time collection of the samples. GPH affirms that this might have also impacted why the results varied.
“We are happy with our quality and believe that reporting positives with one gene detected the right decision. With the other labs only calling positives when two genes are detected, they are possibly under reporting and releasing negative results that should be called positive based on the less stringent algorithm.”
Unconfirmed reports have indicated that the government has launched a thorough investigation into the matter as GPH faces possible retribution over the matter.
“The government knows they blundered and now want to silence GPH by indicating that they are the ones who faulted. There is a lot of mix up with how the government tests and confirms results as negative.” Botswana currently stands at 46 new cases with only 17 active cases with 28 recoveries and 1 death.
President Mokgweetsi Masisi has also gone into his fourth quarantine since Corona was discovered in Botswana. According to a press release released on Thursday, there is a new positive Covid-19 result on one of the President’s officials.
A confidential report from enquiry on the award of tenders at Botswana Power Corporation (BPC) has recommended that key employees within the organisation be subjected to a Declaration of Assets exercise in a bid to find if they have been part of improper award of tenders cabal.
The confidential report seen by this publication was commissioned to give an overview on how procurement of equipment (imports) is conducted and awarded at BPC. The report titled “Enquiry into BPC tenders” which was released last month (5 May 2020), recommends that the organisation should be clear from the start whether they use selective tender or open tender process and which one will work for them.
High Court Judge Godfrey Radijeng has this week reinstated a Directorate of Intelligence and Security (DIS) agent who was fired by the spy agency in August 2017. Justice Radijeng further ordered in the judgement that he be paid arrears from the time he was fired and for the cost of the litigation.
The reinstated DIS agent, Walter Matsoga, was in 2014 involved in a car accident and sustained injuries in the course of his clandestine job. More than a year later, on the 15th June 2015, the spy operative was subjected to a medical assessment at the instance of the DIS to determine his fitness to continue being in employment. The assessment was carried out and he continued to be under the employ of the Directorate of Intelligence and Security.