Africa-Press – Botswana. While the government’s push to offload stockpiled gems is aimed at shoring up the public fiscus, it risks straining relations with De Beers further.
Economists at local think tank, Econsult have pointed to growing tensions between Botswana and De Beers amid a sharp slump in diamond sales.
The Botswana Government is reportedly pressuring De Beers to accelerate the sale of its diamond stockpiles, implicitly urging the company to prioritise fiscal revenue over diamond prices.
Botswana, whose economy heavily depends on diamond revenues, faces mounting fiscal pressures as global demand for diamonds wanes. The government’s push to offload stockpiled gems aims to shore up state coffers, but this stance risks further straining relations with De Beers, the dominant player in the country’s diamond industry.
Regardless of price
In its latest economic review (second quarter, April-June 2025) compiled by leading economist and former Bank of Botswana Deputy Governor Keith Jefferis, the firm attributes the tensions between Botswana and De Beers to a decision by the former to pile pressure on the diamond giant to sell off diamond stockpiles “regardless of the price”.
“There is pressure from government on Debswana and De Beers to make more efforts to sell off stockpiles of diamonds – implicitly, regardless of the price – in order to bring in fiscal revenues. It remains to be seen how this tension will play out,” said Econsult.
According to the economic think tank, “there remains a contentious issue around how to deal with the high levels of inventory in the diamond supply chain, as a result of low sales”.
Since 2023
Econsult notes that in the case of other commodities, the normal expectation would be for excess supply to cause prices to fall, leading to reduced supplies and higher demand to rebalance the market at a lower price level.
“In the diamond market this only happens to a limited extent, with a reluctance on the part of some producers to sell off diamonds at low prices, which it is thought would undermine the status of diamonds as a ‘luxurý’ commodity,” says Econsult.
It notes that the slowdown in the global diamond industry that has been evident since 2023 largely continued into the second quarter of 2025, albeit with some signs of modest recovery.
New US tariff regime
“The same factors that have been apparent for some time – competition from lab-grown diamonds (LGDs), weak demand in China, and the impact of sanctions on Russian diamonds – have been compounded by the uncertainty resulting from the new US tariff regime,” says Econsult.
The firm says following the announcement of increased US tariffs in April, and their subsequent suspension – now until 1st August 2025 – the level of the final tariffs to be imposed on various US trading partners remains unclear.
“This has caused uncertainty amongst diamond exporters, with a surge in diamond exports to the US in April in an attempt to beat the introduction of the tariffs, followed by caution and a holding back of exports.”
Global supply glut
In addition, Econsult, says “it has become apparent that weak demand in China has not only led to a drop in diamond exports to that country, but diamonds previously imported have now been re-exported back to global markets, contributing to the global supply glut”.
There have been important impacts of this in Botswana. Econsult says Debswana announced that it would temporarily close its two mines for a period of three months in order to assist in rebalancing supply with demand. It has also been undertaking a voluntary redundancy exercise to align employment levels with anticipated lower production.
Debswana’s diamond production in the second quarter of the year was 2.651 mcts, a reduction of 42% from 4.752 mcts in the first quarter of the year.
Source: Botswana Gazette
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