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.
While there is no hard-and-fast rule in politics, former Molepolole North Member of Parliament, Mohamed Khan says populism acts in the body politic have forced him to quit active partisan politics. He brands this ancient ascription of politics as fake and says it lowers the moral compass of the society.
Khan who finally tasted political victory in the 2014 elections after numerous failed attempts, has decided to leave the ‘dirty game’, and on his way out he characteristically lashed at the current political leaders; including his own party president, Advocate Duma Boko. “I arrived at this decision because I have noticed that there are no genuine politics and politicians. The current leaders, Boko and President Dr Mokgweetsi Masisi are fake politicians who are just practicing populist politics to feed their egos,” he said.
Former Botswana Democratic Party (BDP) parliamentary hopeful, Lawrence Ookeditse has rejected the idea of taking up a crucial role in the Botswana Patriotic Front (BPF) Central Committee following his arrival in the party this week. According to sources close to development, BPF power brokers are coaxing Ookeditse to take up the secretary general position, left vacant by death of Roseline Panzirah-Matshome in November 2020.
Ookeditse’s arrival at BPF is projected to cause conflicts, as some believe they are being overlooked, in favour of a new arrival. The former ruling party strategist has however ruled out the possibility of serving in the party central committee as secretary general, and committed that he will turn down the overture if availed to him by party leadership.
Ookeditse, nevertheless, has indicated that if offered another opportunity to serve in a different capacity, he will gladly accept. “I still need to learn the party, how it functions and all its structures; I must be guided, but given any responsibility I will serve the party as long as it is not the SG position.”
“I joined the BPF with a clear conscious, to further advance my voice and the interests of the constituents of Nata/Gweta which I believe the BDP is no longer capable to execute.” Ookeditse speaks of abject poverty in his constituency and prevalent unemployment among the youth, issues he hopes his new home will prioritise.
He dismissed further allegations that he resigned from the BDP because he was not rewarded for his efforts towards the 2019 general elections. After losing in the BDP primaries in 2018, Ookeditse said, he was offered a job in government but declined to take the post due to his political ambitions. Ookeditse stated that he rejected the offer because, working for government clashed with his political journey.
He insists there are many activists who are more deserving than him; he could have chosen to take up the opportunity that was before him but his conscious for the entire populace’s wellbeing held him back. Ookeditse said there many people in the party who also contributed towards party success, asserting that he only left the BDP because he was concerned about the greater good of the majority not individualism purposes.
According to observers, Ookeditse has been enticed by the prospects of contesting Nata/Gweta constituency in the 2024 general election, following the party’s impressive performance in the last general elections. Nata/Gweta which is a traditional BDP stronghold saw its numbers shrinking to a margin of 1568. BDP represented by Polson Majaga garnered 4754, while BPF which had fielded Joe Linga received 3186 with UDC coming a distant with 1442 votes.
There are reports that Linga will pave way for Ookeditse to contest the constituency in 2024 and the latter is upbeat about the prospects of being elected to parliament. Despite Ookeditse dismissing reports that he is eying the secretary general position, insiders argue that the position will be availed to him nevertheless.
Alternative favourite for the position is Vuyo Notha who is the party Deputy Secretary General. Notha has since assumed duties of the secretariat office on the interim basis. BPF politburo is expected to meet on 25th of January 2020, where the vacancy will be filled.
Botswana Democratic Party (BDP) big wigs have decided to cancel a retreat with the party legislators this weekend owing to increasing numbers of Covid-19 cases. The meeting was billed for this weekend at a place that was to be confirmed, however a communique from the party this past Tuesday reversed the highly anticipated meeting.
“We received a communication this week that the meeting will not go as planned because of rapid spread of Covid-19,” one member of the party Central Committee confirmed to this publication. The gathering was to follow the first of its kind held late last year at party Treasurer Satar Dada’s place.