Botswana’s diamond giant slashes output as demand falls

Botswana’s Diamond Production Slashed Amid Global Demand Decline

Debswana pauses operations and trims output as lab-grown competition and economic pressures bite.

Debswana Halts Operations at Key Mines
Botswana’s leading diamond producer, Debswana, has halted operations at several of its mines, citing a significant and prolonged drop in global demand for natural diamonds.

Joint Venture Faces Revenue Collapse
The company, a joint venture between the Botswana government and mining powerhouse De Beers, reported a near 50% plunge in sales revenue last year, prompting immediate and drastic measures to reduce costs.

Diamonds: A Pillar of Botswana’s Economy
According to the International Monetary Fund, Botswana remains the world’s top producer of diamonds by value. The diamond sector contributes about 25% of the country’s GDP, making it central to national income and development.

Production Cut by 40% for 2024
Debswana announced it would scale down its production to 15 million carats in 2024 — a sharp 40% reduction from the previous year. The aim is to stabilize the market and reduce overheads in areas such as fuel and power consumption.

Cost-Cutting Amid Weak Market Conditions
In a formal statement, Debswana explained the production cuts were a strategic response to “challenging market conditions,” with the company pursuing “significant cost savings” during this period of uncertainty.

Market Faces Tariffs and Technological Competition
In addition to weak demand, Debswana pointed to mounting global trade pressures, including US-imposed tariffs, as contributing factors. The rise of lab-grown diamonds, which are cheaper and increasingly accepted, has also disrupted the traditional mined diamond market.

Flagship Mines Temporarily Shut Down
Debswana has suspended activity at its prominent Jwaneng and Orapa mines. Each mine is expected to remain closed for three months, impacting overall production and Botswana’s diamond supply chain.

Diversification Efforts Yet to Yield Results
For decades, Botswana has attempted to diversify its economy to reduce its dependency on diamonds. Although progress has been made in tourism, banking, and copper mining, diamonds still dominate the country’s export earnings.

Three-Quarters of Foreign Earnings Still from Diamonds
Despite diversification efforts, diamond sales continue to generate roughly 75% of Botswana’s foreign currency earnings, meaning that any downturn in this sector has far-reaching consequences for the nation.

Job Security Maintained — For Now
In light of the slowdown, Debswana reassured employees that no compulsory job losses would take place. However, the company confirmed it would continue to offer voluntary exit packages as part of its cost-control strategy.

Economic Forecast Slashed Due to Industry Crisis
As the diamond slump persists, a senior finance official told Reuters that Botswana is now bracing for almost zero economic growth in 2025 — a steep fall from previous projections, directly tied to the mining crisis.

Diamond Decline and Its Wider Implications
The sustained drop in demand for mined diamonds is not isolated. Experts say shifting consumer preferences, economic instability, and competition from synthetic gems are forcing traditional producers to rethink their long-term strategies.

The Future of Natural Diamond Markets
With demand likely to remain subdued and pressures such as environmental concerns and price sensitivity influencing buying behavior, Botswana and producers like Debswana may need to innovate or further diversify to sustain their economies.

Crisis as a Catalyst for Reform?
Economists suggest that while the current downturn is painful, it could finally push Botswana to accelerate diversification, strengthening sectors that can withstand global commodity fluctuations and reduce overreliance on a single export.

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