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Economy set to sparkle again, as diamonds rebound

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Economy set to sparkle again, as diamonds rebound
REVENUE EARNER: Diamond prices expected to rise

Botswana’s economy is set to sparkle once again if latest statistics brief on indices of the physical volume of mining production for the fourth quarter of 2016 by Statistics Botswana (SB) are anything to go by.

Figures released recently have shown that diamonds, Botswana’s source of both income and pride, are showing growing signs of rebounding on the international market after a slump for close to a decade.

Following the 2008 world credit crunch, diamond sales plummeted as most consumers were treating the worlds’ most precious stone as luxury. However, signs of recovery are being noticed, as the ugly effects of financial recession are fading away.

In 1969, the Botswana government signed a 50/50 deal with global diamond giant De Beers to explore and mine all of the country’s diamonds.

The partnership helped turn Botswana into one of Africa’s most prosperous countries, one of the highest per capita incomes on the continent.

“Index of mining production stood at 82.4 in the last quarter of 2016 showing a year-on-year improvement of 5.8 percent from 77.9 during the last quarter of 2015.As compared to the third quarter of 2016, the Index of Mining Production shows an increase of 10.7 percent from the index of 74.4 to 82.4 during the period under review,” reads part of the report.

Figures also indicated that quarter-on-quarter changes in the index of mining production reflect fluctuating mining production series, owing to unstable market environment in the world economy.

“Diamond production contributed 12.8 percentage points to the increase in index of mining production during the last quarter of 2016,” SB figures showed.

Indications are that diamond production increased by 20.8 percent when looking at the quarter-on-quarter changes in comparison to quarters three and four of 2016.

Furthermore, the same trend is observed when comparing the period under review to the same period in 2015 as it shows that diamond production increased by 14.3 percent.

“The increase in diamonds production can be indicative of improving trading conditions leading to the need to increase production due to growing demand on the international market,” SB indicated in its findings on indices of mining production.

Presenting his Committee of Supply speech in parliament recently, Mineral Resources, Green Technology and Energy Security Minister Advocate Sadique Kebonang revealed that diamond market improved – a development that resulted in the actual sales exceeding production in 2016.

Kebonang further stated that Debswana Diamond Company produced 20.9million carats in 2016 compared to 20.4milion carats in 2015.

He added that sales were 26.3million carats generating at least P40billion compared to a paltry 14.7 million carats which generated P24billion in 2015.