Africa-Press – Botswana. Mmetla Masire’s exit from the Okavango Diamond Company (ODC) in a “mutually agreed decision” comes whilst the state diamond trader is battling to balance its diamond sales against the support needed to retain value for the precious stones.
Highly placed insiders in the industry told The Monitor that the ODC has been struggling to balance the need to sell more diamonds and help budget revenues against the importance of supporting their pricing.
Natural diamonds market themselves on rarity and exclusiveness, factors which have been under pressure from the explosion in synthetics, which are both of endless supply and increasingly cheap. Industry players such as De Beers and the ODC have been rallying other natural diamond players to resist the urge to ‘dump’ more stones into the market, in order to support prices and allow a healthy clearing out of the inventory that has built up during the prolonged downturn.
In September, the ODC rejected bids for a $100 million auction of rough diamonds, after receiving weak offers. At the time, Masire said the decision was taken to safeguard the value of the stones, rather than risk a negative impact in the market.
“As custodians of Botswana’s national treasure, our priority is safeguarding the value of our diamonds,” he said in a statement. “Sometimes, leadership means knowing when not to sell. Withholding goods in the short term ensures better outcomes for the market, for Botswana, and for our partners. We will not join the race to the bottom on prices; our focus is on protecting the integrity and enduring value of Botswana’s diamonds.”
President Duma Boko’s government is experiencing a fiscal crisis due largely to the diamond slump, which began in the third quarter of 2023. The President has publicly urged De Beers to ramp up its diamond sales, saying the company was failing to market the stones effectively. Industry insiders said the ODC, as the government’s directly controlled diamond sales entity, was at the coalface of the dilemma.
“The ODC could technically sell as much stock as it can as cheaply as it can, to help revenues, but doing so would erode the value of natural diamonds and damage the industry immensely, both now and into the future. It would signal to the market that diamonds are cheap trinkets and that the century-old marketing that has supported pricing is fake. The marketing has been on the enduring value, rarity of diamonds, their exclusiveness, and that they are an aspirational purchase, not something that’s available everywhere and dirt cheap. ODC does not mine diamonds, but its allocation from Debswana makes it one of the major pushers of product into the market, and so strategy on sales and pricing is very key in getting out of this slump with values intact,” an insider told The Monitor.
According to figures from its website, the ODC sold $26.2 million worth of carats at its November spot auction, up from $22.7 million in October and about $22 million in September. Per month, prices achieved per carat averaged $345 per carat in September, $394.1 per carat in October, and $268.4 in November.
“The trends from the website also show an uptick in the carats brought to auction, so perhaps there has been pressure to sell, or it could also be that the conditions are warming up,” the insiders said.
As a diamond trader, the ODC has a precarious internal existence during downturns in the industry. It buys diamonds at a certain price from Debswana and runs the risk of selling at a loss, or holding onto expensive inventory, whilst waiting for an improvement in prices.
The ODC is entitled to 30% of Debswana’s output and, according to the diamond trader’s website, it enjoys sales in the region of $900 million per annum. ODC’s Chief Finance Officer Lipalesa Makepe will take over as Acting Managing Director (MD) from December 1 when Masire officially departs.
“She will guide the organisation through this transition to ensure continued operational stability,” the ODC said in a statement on Friday.
Makepe joined ODC as CFO in April 2018 from the then Barclays Bank of Botswana.
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