De Beers’s flagship diamond mines in Botswana are operating at about 80% of capacity, signaling a marked improvement in the international diamond market less than a year after demand for the gems collapsed, The Financial Times reported yesterday.



“Diamond consumption has not improved to anywhere near the levels that we are accustomed to . . . but the abrupt rate at which it [consumption] was dropping has started to stabilize,” Sheila Khama, Chief Executive of De Beers in Botswana told the Financial Times.

Ms Khama said stocks for some better categories of rough diamonds were beginning to fall and that the independent businesses that buy, cut and polish rough diamonds and then sell on the stones to the retail trade had recently increased their purchases at the sights.



“The pace of recovery is picking up in rough diamonds. We are seeing an improvement in the level of sales and the availability of finance to our clients,” said Ms Khama.



The improvement, though modest, is significant because the diamond industry was among the worst-hit after the international financial crisis took root, said the report.

De Beers, which produces about 40% of the world’s rough diamonds, was forced to shut down its Botswanan mines for the first few months of 2009 to support a recovery in demand and prices, losing hundreds of millions of dollars in the process, it said.



Botswana, the world’s biggest producer of high value rough diamonds and one of Africa’s best managed economies, derives about a third of its GDP from sales of the stones and has seen economic output sink a tenth this year. Joint ventures between the government and De Beers run both the mines and a valuing and sorting facility.



The diamond market froze after banks in October and November last year refused to extend loans to sight holders and manufacturers that typically buy rough diamond stock on credit. Recovery since then has been slow, partly because stocks of both rough and finished diamonds remain very high, said the report.



Ms Khama said that recent increases in sight sales in Botswana – itself the world’s leading producer of high value diamonds – reflected increased confidence among retailers ahead of the post-Thanksgiving and pre-Christmas season in the US, a period in which traditionally some 80% of US annual diamond jewelry sales take place.



Overall, De Beers expects its diamond production in Botswana to fall by about 40% compared with 2008. Production at three mines in Botswana – Jwaneng, Orapa and Letlhakane – resumed in May. One mine – at Damtshaa – remains closed, but this accounts for only about 1% of output, it said.