Debswana Diamond Company, Botswana’s premier diamond producer, has initiated a significant reduction in its mining operations, citing sustained global demand weakness and mounting economic pressures. The company, a 50-50 joint venture between the Botswana government and De Beers, announced a temporary halt in production at key sites, including the Jwaneng Cut-9 and Orapa mines, aligning output with the subdued market conditions.
This strategic move follows a challenging fiscal year for Debswana, which experienced a 46% decline in sales revenue in 2024 compared to the previous year. Production volumes also saw a downturn, with output dropping by 27% to 17.93 million carats. Looking ahead, the company has set a reduced production target of 15 million carats for 2025, marking a 16% decrease from the previous year’s figures.
The global diamond industry has been grappling with a confluence of adverse factors since mid-2023. Persistent low demand across the diamond pipeline, exacerbated by US-imposed tariffs, has created additional market pressures. An oversupply of certain diamond categories, particularly smaller and lower-quality stones, coupled with shifting consumer preferences towards lab-grown alternatives, has further disrupted traditional demand dynamics. Economic uncertainties in key markets, including inflationary pressures and changing luxury spending patterns, have compounded these challenges.
In response to these market conditions, Debswana has implemented cost-saving measures, including the suspension of operations at the Letlhakane tailings and Jwaneng Modular plants. The company has emphasized its commitment to avoiding involuntary job cuts, offering voluntary separation packages to employees as part of its cost-control strategy.
The downturn in the diamond market has had significant repercussions for Botswana’s economy, which is heavily reliant on diamond revenues. Diamonds account for approximately 30% of the nation’s revenue and 75% of its foreign exchange earnings. The economic contraction in 2024 was recorded at 3%, with the International Monetary Fund projecting a further 0.4% decline in 2025. The government has revised its 2025 economic growth forecast to near zero, a stark contrast to the 3.3% growth anticipated in its February budget presentation.
Debswana’s decision to scale back production is part of a broader effort to stabilize the market and manage operational costs. While some capital projects have been slowed down, long-term initiatives like the Jwaneng underground conversion will continue. The company aims to achieve significant cost savings across areas such as fuel and electricity consumption during this period of reduced activity.
As Botswana navigates these economic challenges, the government continues to explore avenues for economic diversification. Efforts to boost sectors such as tourism, finance, and the mining of other minerals like copper are ongoing. However, the country’s heavy dependence on diamond sales underscores the urgency of these diversification initiatives to mitigate the impact of future market downturns.