De Beers fights COVID-19 volatility

Giant diamond mining company De Beers Group said despite the hiccups they suffered due to COVID-19, they will persist against the pandemic.

The group admitted that the unprecedented situations incurred as result of the coronavirus menace on the world economies at large has impacted hard on its income streams as sales fell.

De Beers Executive Vice President Diamond Trading, Paul Rowley told an online media briefing recently that COVID-19 is an unprecedented contest as compared to prior economic disasters.

 He is however confident that the group will continue to make all major investments across the diamond value chain to ensure continued success during these economic hurdles plus volatile markets.

According to Rowley, investment on production capacity around rough diamond distribution efficiency still remains priority, noting that a large impact was felt on rough diamonds sales.

“The business operations have been affected by the COVID-19 spread across all of our markets. China has resumed economic activity and is promising for our diamonds in that market. USA is a top market but the situation has severely impacted consumer demand representing around half of the global market. India lockdown is hitting our market hard too,” he said.

The company, which mines its 60% of diamonds in Botswana through Debswana, on joint 50-50 partnership with Botswana Government, is in negotiations with government to provisionally migrate diamond viewing to closer international diamond sale centre to speed up sales amidst decline.

De Beers said post Coronavirus flexibility will be key as it there will be reduced global guidance production by 7 million carats to reflect demand and support long term value, stressing that is focused on returning to business as usual in Botswana soon.

Executive Vice President for Corporate Affairs, David Prager, said the group will continue with its corporate social response plans in line with their Forever Building Strategy. He said the group in meeting its community response has donated P20 million towards government COVID-19 relief fund, with P10 million in cash and half being the value of medical supplies.

The group said it is still impossible to provide a detailed outlook as a lot depends on the progress of virus and government response but it will not find new markets as their aim is to explore more possible lying investment opportunities into the existing markets such as China.

Economic rescue plan

Local independent economist and Managing Consultant at SPECK Dynamics Sennye Obuseng said the mining sector as the backbone of the economy has been heavily crippled by COVID-19.

Consequently, he posited that there is supposed to be robust diversification by government to tap into other viable sectors; highlighting agriculture as best positioned to reposition the economy.

“The large part of government revenue comes from diamond sales seconded by tourism which has also suffered more loss than mining from COVID-19. The country should turn focus into new means of revenue away from mining sector and it should also diversify its streams,” he averred.

In addition, Obuseng contended that all sectors of the economy, including government should be innovative in stimulating potential shock sectors of agriculture so as to safeguard food security.

He singled out the creative arts and services industry as other sectors that should be tapped into; shifting away from heavy reliance the mining and tourism sectors that are in comma. In terms of government driving the economic recovery response, he stressed that it can resort to smart borrowing to fund new sectors that proved worthy to unlock growth.