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Debswana production up 8 % in 2022

Production at Debswana, the partly state owned rough diamonds miner has risen by 8 percent in the year 2022 to 24.1 million carats from 22.3 million in the prior year 2021, Debswana’s parent company – De Beers Group reported last week.

In its production report for the fourth quarter of 2022 De Beers revealed that rough diamond production increased by 6% to 8.2 million carats, reflecting strong operational performance across the assets, partially offset by the planned completion of the final cut at Venetia open pit.

In Botswana, production increased by 11% to 5.8 million carats, primarily driven by strong plant performance, particularly at Jwaneng.

Debswana production took off with 6.1 million carats in the first quarter of 2022 before going down to 5.5 million carats in the second quarter of year. Production then picked up significantly to 6.6 million in the third quarter and then dropped to 5.7 million in the last quarter of the year.

For the last quarter of 2022 production at other De Beers operations went up significantly with Namibia leading the increase with a 51 % jump.

Production in the south western country where De Beers operates both inland and marine mining increased by 51% to 0.6 million carats, primarily driven by the continued strong performance from the Benguela Gem vessel and the treatment of higher grade ore at the land operations.

South Africa production decreased by 27% to 0.9 million carats in the fourth quarter of 2022, due to the planned completion of the final cut at Venetia open pit. The mining of the open pit was completed in December and the mine will transition to underground operations in 2023.

Production in Canada increased by 7% to 0.8 million carats in the last quarter of 2020, primarily driven by the treatment of higher grade ore.

In terms of sales midstream polished diamond inventories continued to build in the fourth quarter, as retailers restocked more cautiously amidst the growing economic uncertainty. This led to downward pressure on wholesale polished prices.

However, demand for De Beers’ rough diamonds remained steady, with rough diamond sales totalling 7.3 million carats (6.6 million carats on a consolidated basis) from two Sights, compared with 7.7 million carats (7.2 million carats on a consolidated basis) from three Sights in Q4 2021 and 9.1 million carats (8.5 million carats on a consolidated basis) from three Sights in Q3 2022.

The full year consolidated average realised price increased by 35% to $197/ct (2021: $146/ct), driven by a 23% increase in the rough diamond price index, as well as selling a larger proportion of higher value rough diamonds in the first half of the year.

The increase in the rough price index reflected overall positive consumer demand for diamond jewellery and was supported by De Beers’ proposition of provenance-assured diamonds.

Data released by Bank of Botswana late January 2023 indicates that Sales of diamonds from Debswana stood at $4.588 billion in 2022 compared to $3.466 billion in 2021.

In local currency, this indicates that rough diamond sales rose 48.3% to P56.544 billion, on the back of stronger dollar during the period.

Last week De Beers released results for the value of rough diamond sales (Global Sightholder Sales and Auctions) for the first cycle of the year 2023.

Figures posted by the London headquartered miner reflected a lower start for the year with a 31 percent drop in sales from $660 million recorded in the first cycle of the year 2022 to $450 million registered for the first sales cycle of 2023. This was however an increase from the $417 million recorded in the immediate last sales cycle, 2022 cycle 10.

Alongside the results announcement, De Beers noted that owing to the restrictions on the movement of people and products in various jurisdictions around the globe, it continued to implement a more flexible approach to rough diamond sales during the first sales cycle of 2023, with the Sight event extended beyond its normal week-long duration.

As a result, the provisional rough diamond sales figure quoted for Cycle 1 represents the expected sales value for the period 16 January and 31 January and remains subject to adjustment based on final completed sales.

Commenting on the results Bruce Cleaver, CEO, De Beers Group, said consumer demand for diamond jewellery over the 2022 end-of-year holiday season performed well.

He said as expected, given the macroeconomic outlook at the time, Sightholders took a cautious approach in late 2022 in planning their 2023 allocation schedule, with a greater weighting of goods to be purchased as the year progresses.

“While there is still some uncertainty over the macroeconomic environment, we see cautious optimism for demand to increase as China continues to reopen and inflation rates start to decrease in many major economies.”

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Stargems Group establishes Training Center in BW

20th March 2023

Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.

The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.

“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.

In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices.  Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.

“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.

Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy,  Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.

“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.

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Food import bill slightly declines

20th March 2023

The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.

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Moody’s Reaffirms African Trade Insurance’s A3 Rating & Revises Outlook to Positive

13th March 2023

Moody’s Investors Service (“Moody’s”) has affirmed the A3 insurance financial strength rating (IFSR) of the African Trade Insurance Agency (ATI) for the fifth consecutive year and changed the outlook from stable to positive.

Moody’s noted that the change in outlook to positive reflects the strong growth in ATI’s membership base – that has resulted in improved portfolio diversification, strengthened capital adequacy, and the good profitability despite the challenging operating environment. In addition, ATI benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.

The strong membership and equity growth are some of the key considerations for the consistent reinstatement of ATI’s A/Stable rating by Standard & Poor’s and Moody’s rating, over the years. Also supporting the rating affirmation are; consistent improvement in financial performance, commitment of its shareholders who continue to uphold the preferred creditor status, its high quality and conservative investment portfolio as well as strong relationships with a number of global reinsurers that provide significant risk-bearing capacity.

With the change in outlook to “positive”, ATI is now better placed to provide enhanced support to its member countries, attract additional shareholding and grow its portfolio. The positive outlook is an indication that if ATI continues to demonstrate its strong underwriting performance and ability to recover claims under the preferred creditor arrangements, among other factors, an upward pressure towards an upgrade may be generated. The Moody’s press release can be accessed from here

Commenting on the rating, Africa Trade Insurance Chief Executive Officer Manuel Moses said: “This positive revision is in line with our 2023 – 2027 strategic objectives in which we set to improve our rating outlook to positive in the first year, and achieve an upgrade of at least “AA”/Stable rating by both Moody’s and S&P within this Strategic Plan period. We aim to achieve this by doubling our exposures and increasing our capital to more than USD1 billion.”

ATI’s mandate is to provide trade-credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors. These insurance products not only directly encourage and facilitate foreign direct investment as well as local private sector investment in our member countries, but also contribute to intra- and extra-African trade.

About The African Trade Insurance Agency 

ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s, and in 2019, ATI obtained an A3/Stable rating from Moody’s, which has now been revised to A3/Positive.

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