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The glittering facade of Botswana’s diamond industry is showing significant cracks as a potent cocktail of weakened global demand and hefty new tariffs from the United States casts a long shadow over the nation’s primary economic driver. Recent figures paint a stark picture, revealing a dramatic slump in production and a chilling forecast for the year ahead, leaving industry players and the government bracing for a bumpy ride.
Debswana Diamond Company, the jewel in Botswana’s mining crown and a partnership between the government and De Beers, saw its rough diamond production plummet by a staggering 31 percent in the final quarter of 2024, tumbling to 4.2 million carats from 6.1 million carats in the same period the previous year. This alarming drop, detailed in the Bank of Botswana’s (BoB) latest Monetary Policy Report, contributed to an overall production of 17.9 million carats for the entire year, significantly short of the ambitious 20.7 million carat target.
The central bank’s report further revealed a sobering revision of production guidance for the larger De Beers Group. For 2025, expectations have been slashed to a range of 20 to 23 million carats, a considerable downturn from the initial projection of 30 to 33 million carats. The BoB minced no words, attributing this recalibration to the “challenging rough diamond trading conditions” gripping the global market.
Adding fuel to the fire is the United States’ imposition of a hefty 37 percent tariff on Botswana’s exports, a move that has sent shockwaves through the industry. With the US being a significant consumer of Botswana’s precious stones, this tariff is expected to severely curtail the nation’s export capacity and, consequently, government revenue derived from the mineral sector.
Charles Siwawa, the no-nonsense Chief Executive Officer of the Botswana Chamber of Mines (BCM), didn’t mince his words, stating that Botswana’s rough diamonds were already enduring a “torrid time,” and the tariffs would only exacerbate the crisis. He warned of increased production costs, lower profitability, and the potential for diamond producers to scale back operations, with the ominous possibility of job losses looming. “The whole tariffs situation would impact negatively on the economy,” Siwawa cautioned.
The gloom extends beyond Debswana. Lucara Diamond Corporation’s Karowe Mine also felt the pinch, reporting a 7.3 percent decrease in production in the fourth quarter of 2024, sliding to 91,046 carats from 98,177 carats in the corresponding period of 2023. The company anticipates a modest recovery in 2025, projecting production between 360,000 and 400,000 carats and sales of 400,000 to 420,000 carats.
Anglo American’s latest production report for the first quarter of 2025 echoed the prevailing pessimism. Their rough diamond production witnessed an 11 percent decline to 6.1 million carats, a direct consequence of adjusting output to the prolonged period of sluggish demand. In Botswana specifically, Anglo American reported an 8 percent decrease to 4.6 million carats, reflecting planned production cuts.
While consumer demand for diamond jewellery in the US during the year-end holidays met expectations, the appetite for rough diamonds in the first quarter remained subdued. The midstream sector continues to exercise caution in restocking, grappling with surplus inventories of loose polished diamonds.
Globally, the price of rough diamonds has taken a hit. The BoB highlighted a 6.2 percent drop in the global rough diamond price index between the fourth quarter of 2024 and the first quarter of 2025, falling from 134.3 points to 125.9 points. This decline is attributed to weakened demand from major consumers like China and the US.
Adding another layer of complexity to the diamond crisis is the growing prominence of lab-grown diamonds. The BoB pointed out that these synthetic alternatives are increasingly competing with natural diamonds, currently holding a significant 20-25 percent market share. Projections suggest this figure could surge to 30-40 percent by 2030, a stark contrast to their near-zero presence in 2015.
The polished diamond market is also feeling the strain, with the global polished diamond price index decreasing by 7.3 percent in the fourth quarter of 2024 and a further 3 percent dip in December alone, according to Anglo American. This reflects both weaker demand and a challenging global economic outlook.
For Botswana, a nation heavily reliant on diamond revenues to fund its development and social programs, the confluence of these negative factors presents a significant challenge. The government will be under pressure to navigate these turbulent times, explore diversification strategies, and potentially engage in diplomatic efforts to mitigate the impact of the US tariffs. The sparkle may have dimmed for now, but the resilience and strategic thinking of this Southern African nation will be crucial in determining the future luster of its diamond industry.
