Diamonds add shine to Botswana
2005-01-09 17:41
Gaborone - News that a weaker dollar has prompted De Beers' Diamond Trading Company to raise prices of rough diamonds by 3% from the January 10 sight will be a cash bonus for major supplier Botswana.
It will also widen the value-per carat gap between Botswana diamonds and those produced in Russia, which has been closing. Botswana supplies 70% of the diamonds sold by the DTC and based on current figures can expect upwards of an extra $70m over 2005.
Botswana's diamond exports in 2003 were a record $2.4bn (11.7bn pula, R15.7bn) and in 2004 to September $2.1bn (9.8bn pula, R13.3bn). Exports in 2004 were 41 million carats with no values yet released.
The country, although working to diversify its economy, as yet has no other significant source of income. It relies on the gems for 75% to 80% of its export income, a direct 50% of its government income and 35% to 40% of its gross domestic product.
Indirectly, the reliance on diamonds is much greater, there would have been little development of the country if the diamonds had not been here.
The world economic slowdown has seen direct investment in Botswana - key to the diversification programme - drop to 12bn pula (R16.1bn) in 2003 from 16.3bn pula (R21.9bn) in 2001.
And over 2003, as the pula hardened, a 20% dollar increase in diamond revenues resulted in a 7% decrease in pula terms.
Botswana is also hard hit by the cost of fighting the HIV/Aids epidemic. It has one of the world's highest rates of infection. Citizens are entitled to free anti-retroviral drugs which official reports indicate cost the country 477m pula a year (R641m a year), or 2.6% of the most recent national budget.
Russian diamond production figures, made public in December for the first time, have surprised industry observers, reported the Belgium-based Diamond High Council (HRD) through its January 'Antwerp Facets' News Service.
The information has been held as a state secret since diamonds were first discovered in Siberia in 1955. Russia was pushed to release them before it assumed the chairpersonship of the Kimberley Process Certification Scheme from January 1, a central requirement of which is transparency, the council said.
Production over 2003 is shown to be much higher in carat weight than observers had thought and the per carat value to be much lower, but increasing in the case of export diamonds - Russia has a domestic market, Botswana exports all its production.
Over 2003, Russia emerged as the number two overall producer of diamonds in dollar tersm after Botswana.
- SAPA