Debswana, which recently revealed that it plans to extend the closure of its Damtshaa mine to the end of 2010 due to uncertainty in the market said the crisis which hit the diamond industry as a result of the global economic down turn is far from being over.
Debswana resumed production at three of its four mines after a temporary closure in February, but said Damtsha would remain closed till the end of the year.
The miner is also expected to invest 500-million USD in capital expenditure to expand its Jwaneng diamond mine, and this would keep the mine profitable until at least 2025.
Rough&Polished’s Mathew Nyaungwa spoke on the phone to Debswana Group Public & Corporate Affairs manager Esther Kanaimba from Botswana’s capital, Gaborone and she said the world’s leading diamond producer by value, was this year expected to produce 17.1 million carats and about 20 million carats next year.
Bellow is the full interview we had with Debswana’s spokesperson.
What is your company’s financial and operational highlight for the year 2009?
We do not announce our financial and operational highlight to the public until they have been finalized at the end of the year and published in our annual review, which normal comes out in February or so.
Reports say the five-year contract for disposal of rough diamonds, between Debswana and De Beers will expire soon. What is your opinion about a possible renewal of this contract?
The contract is not between us and De Beers it is actually between the government of Botswana and De Beers, so it is not something that Debswana as a company, which is public owned, will talk about it, but it is a shareholder issue, it is not a company issue.
Several diamond manufacturers reported higher prices during the November sight period, what was the case in Botswana during this period?
There is no public information around the prices of rough, the information that is there is usually available is around the prices of polished. It is always difficult to get rough prices, we cannot say for example, there were higher prices because we do not know what the other mining companies that also mine diamonds were selling at, so in the area of rough diamonds it is always very difficult, only what we can say from a Debswana perspective is that there was an improvement in the demand for rough diamonds, whether the price was standard or higher, it is very difficult because we do not know what the other players in the game are selling at.
Do you have any idea what was the drive behind the improved demand you have just noted?
Well, I have no idea because, we don’t play in the area of marketing, our production goes directly to DTCB. I think you can pose that question to DTCB.
Are there any plans to increase the volume of output and the volume of rough diamonds sales on the market in 2010?
Well, I can only comment on output, our projections are that there will probably be a slight increase in output next year, but probably much, much higher than what we have at this point. We don’t anticipate a bounce back to our normal production levels; however, figures for next year will not go beyond 20 million carats. This year Debswana is expecting an output of 17.1 million carats.
What do you think about, whether or not, any measures are going to be taken in order to support demand for rough diamonds, and non-admission speculative inflation, which will result in a drop in prices?
Well, this is a question that I cannot comment on, we are involved in the mining of diamonds, we will not go into demand drive or whatever, we are part of the pipeline that belongs to a family of companies, where we only play in the mining arena. There are those that are in the sorting and valuing, there are those that are in the marketing, and so on and so forth. That is a question that I have no expertise to answer.
Will it be correct to say that the crisis in the diamond industry is over?
We do not anticipate going back to pre-2008 levels; it will definitely take us a very long time. In our view, we do not think the crisis is over. It is highly unlikely that we will go to that era (pre-2008) anytime soon, for this is influenced by a number of factors, that includes demand for diamonds, and we are not seeing much demand now at the rate we would anticipate.
They are fears that diamond reserves in Botswana are depleting fast, hence the government is now making efforts to diversify the economy. What does that make of the future of Debswana?
Our Jwaneng Mine, which is regarded the richest diamond mine in the world is expected to be in operational until 2024, so we have a high level of confidence in Botswana.
Mathew Nyaungwa, Rough&Polished from Botswana
