Lucara Diamond Corp. has recovered a 692.3-carat diamond from its Karowe mine in Botswana, the second massive rough from the deposit this month.
The white, type IIa stone came from the EM/PK(S) unit in the south lobe, known for its large, high-quality rough, Lucara said Monday. The miner found the diamond via its XRT unit, which uses X-ray technology to identify huge stones in large pieces of ore before they get broken up.
The new discovery is the fourth diamond over 300 carats that Lucara has unearthed so far this year, including one earlier this month: a high-quality white, type IIa rough weighing 1,080.1 carats, which the miner announced on August 8.
In addition, “this stone is the 20th diamond larger than 100 carats recovered during 2023 at Karowe,” said Lucara CEO William Lamb. “The recovery of large diamonds from the EM/PK(S) lithology of the south lobe strongly supports our expectations for the underground project.”
Lamb, who replaced Eira Thomas as CEO earlier this month, will lead the continued development of Karowe’s underground expansion. The miner invested $683 million in the project, which it believes will extend the mine’s life until at least 2040, 15 years beyond the original 2025 closure date.
In its most recent results, Lucara announced a 21% drop in its second-quarter revenue to $41.1 million amid a slowdown in market demand. Profit slid 60% to $5 million.
Botswana has reached an eleventh-hour deal with diamond giant De Beers after months of tense negotiations that saw the continent’s top producer threatening to cut ties with the storied company.
The Botswana government and Anglo-American, the majority owner of De Beers, have reached an “agreement in principle”, the two sides said in a statement issued late Friday.
The agreement provides for a new 10-year agreement to sell the rough diamonds produced by Debswana — a joint venture equally owned by the government and De Beers — and a 25-year extension of its mining licenses.
The agreement also gives Botswana an increased 30 percent of diamond production for sale via the state-owned Okavango Diamond Company, progressively increasing to 50 percent in the final year of the contract, De Beers said in a separate statement on Saturday.
No value was given for the agreement.
The previous 2011 sale agreement between the southern African country, one of the continent’s richest, and the world’s largest diamond company by value, was extended exceptionally until June 30, 2023, due to the coronavirus pandemic.
Under terms negotiated by the two sides in 2011, De Beers received 90 percent of the rough diamonds mined, while Botswana had 10 percent to sell itself.
In 2020, Botswana’s share was hiked to 25 percent.
President Mokgweetsi Masisi had threatened to cut ties with the company if the latest talks proved unfavourable for his country.
“If we don’t achieve a win-win situation each party will have to pack its bags and go,” he said in February.
The country turned up the heat the following month by announcing it would soon conclude an agreement to take a 24 percent stake in the Belgian diamond manufacturer HB Antwerp.
Last year, De Beers obtained about 70 percent of its rough diamonds from Botswana.
Diamond mining accounts for a third of the landlocked country’s GDP.
Botswana will not back down on demands for a bigger share of rough diamonds from its joint venture with De Beers, President Mokgweetsi Masisi said on Thursday, upping the stakes as talks for a new sales deal appear to be stalling.
Botswana and De Beers mine the precious stones through their equally owned, 54-year-old mining venture, Debswana Diamond Co. The current diamond sales deal, in place since 2011, has been extended three times since 2020 but is set to expire next month.
De Beers, a unit of Anglo American Plc, gets 75% of Debswana’s production, which was 24 million carats in 2022. The balance is sold to state-owned Okavango Diamond Company, a vehicle established in 2011 as Botswana began moves to independently sell some gems outside of the De Beers system.
Masisi, who has been Botswana’s president since 2018 and will seek re-election in next year’s elections, now wants Botswana to sell more of its diamonds outside the De Beers channel.
“Our agreement with De Beers is very restrictive to us. We signed it at a time when we didn’t know much, but now our eyes are open,” Masisi said at a community meeting in Mmadinare, 400 kilometres (248.55 miles) north-east of the capital, Gaborone.
Masisi hinted at a possible stalemate and litigation over the sales agreement.
“Even if we lose the litigation, our diamonds will remain ours and we will never give in. If I am going to lose votes because of this issue, then so be it,” said Masisi, speaking in Setswana.
Masisi has previously threatened to walk away from the talks if Botswana does not get a bigger share of Debswana’s output for marketing outside the De Beers system. The government has not publicly stated what share it seeks, but it is believed to be as high as 50%, double the current allocation.
De Beers was not immediately available to comment.
The diamond giant says Botswana receives more than 80% of returns from Debswana, after taxes and royalties are factored in. De Beers has previously expressed confidence that its five-decade partnership with Botswana will continue, on terms “that make economic and strategic sense for both parties.”
Botswana may not renew a five-decade sales agreement with De Beers if the diamond producer doesn’t offer a larger share of rough diamonds to the state’s gem trading company, Okavango Diamond Company (ODC).
The move comes after the southern Africa nation acquired last month a 24% stake in Belgian diamond processing firm HB Antwerp for an undisclosed sum.
Analysts saw this deal as a way for Botswana to loosen the Anglo American-owned miner’s grip on its diamond sector, which is a major source of employment and tax revenue for the country.
De Beers and Botswana jointly own Debswana, which mines almost all of the roughs gems in the country — the world’s second-largest diamond producing nation after Russia.
The partnership has helped Botswana become one of Africa’s fastest growing economies, while supplying De Beers 75% of Debswana’s rough diamonds, which are then sorted and sold to sightholders around the world.
Debswana’s diamond sales hit a record $4.6 billion in 2022, compared to $3.4 billion in 2021.
President Mokgweetsi Masisi has threatened to walk away from the talks if Botswana does not get a larger share of Debswana’s output for marketing outside the De Beers system.
The government has not publicly stated what share it seeks, but it is believed to be as high as 50%, double its current allocation.
The two parties have been negotiating for several years to extend their 2011 mining rights and sales agreement, which is due to expire in June this year.
“Colonial” model Rafael Papismedov, co-founder of HB Antwerp, told the Financial Times that a revised deal would help Botswana break free from the current model of being “stuck in a box that says you can only dig and wash the diamonds.”
Papismedov added that De Beers’ operating model carries on “colonization” principles, acting as if Botswana was incapable of building midstream capabilities for polishing diamonds.
Masisi wants more locals employed in the diamond sector, which accounts for a fifth of the country’s gross domestic product.
The largest diamond producer by value has said it is confident that it can maintain its partnership with Botswana, but that some of the negotiations are complex and require more time.
De Beers has said that the arrangement must make economic and strategic sense for both parties, adding that it is committed to supporting Botswana’s aspirations to grow its diamond industry.
The stakes are high for both sides, as they seek to secure their future in a volatile and competitive industry that has been hit by the covid-19 pandemic, changing consumer preferences and ethical concerns.
A new deal between Botswana and De Beers could have significant implications for the global diamond supply chain and the balance of power in the sector.
HB Antwerp has announced a partnership with Botswana to foster a new generation of diamond talent.
It has signed a a five-year memorandum of understanding with the Botswana International University of Science and Technology (BIUST).
They will jointly organize traineeships for Botswanan youth, offer scholarships for promising local talent, drive innovative projects backed by digital supply chains, and create job opportunities in the diamond sector.
The move comes as Botswana threatens to walk away from its long-standing sales agreement with De Beers, which is due for renewal at the end of June.
There has been media speculation that the Okavango Diamond Company (ODC), wholly owned by the Botswana government, was planning to sell its specials (+10.8-carats) to Belgian manufacturer HB Antwerp and to Canada-based Lucara and instead of De Beers.
HB Antwerp says it promotes respect for local communities, fair labor and pay, and investment in skills training and job placement opportunities for local workers.
Rafael Papismedov, its managing partner and strategy director, said: “Young people in Africa have incredible potential, but often do not have access to meaningful opportunities.
“We believe in the power of diamonds to catalyze positive change and look forward to leveraging this partnership to deliver on that potential for the Botswanan people.”
Botswana’s finance ministry disclosed that the diamond trade in Botswana is set to fall back in 2023, due to reduced demand. This is as opposed to 2022 when Botswana’s total mining production increased by 8.2%. Botswana anticipates that the production of diamonds would fall by 1% in 2023, and growth in the diamond trade will decrease to 7%. An official from Botswana’s finance ministry stated on Wednesday that Botswana anticipates its mining sector’s production to remain flat this year as the diamond business loses its luster as a result of a decline in consumer spending and reduced demand for diamond jewelry.
In 2022, the total mining production increased by 8.2%. Although Botswana is the continent’s biggest producer of diamonds, this year’s improvements in copper and coal will not make up for the fall in this commodity.
About the majority of Botswana’s diamonds are produced by Debswana, a joint venture between the government of Botswana and De Beers, a division of Anglo American Plc (AAL.L). In 2022, production increased by 8% to 24.1 million carats.
Trading in diamonds increased 41% in the last year, with Botswana also benefiting from Western consumers avoiding Russian stones as a result of its invasion of Ukraine.
Botswana anticipates that the production of diamonds would fall by 1% in 2023 and that growth in the diamond trade will decrease to 7% from 41% in 2018.
Botswana’s finance ministry senior policy advisor, Keith Jefferis expressed the same sentiments in a statement to the American-based news agency, Reuters.
He noted that the diamond trade would face a major setback during the year, due to a slowdown in consumer demand, particularly in the USA.
He stated, “We see the diamond sector having a bit of a tough year due to an expected slowdown in consumer demand particularly in the USA, because of pressure on real income and consumption.”
High demand for coal and anticipated increases in copper mine production will somewhat offset this.
The Motheo copper mine, owned by Sandfire Resources (SFR.AX), is scheduled to begin operations this year, while the Kalahari Copperbelt’s Khoemacau copper mine is ramping up production to reach its nominal capacity of 60,000 tonnes annually.
The two active coal mines in Botswana the state-owned Morupule and Minergy’s (MIN.BT) Masama mine saw record exports in 2017 and are now considering increasing output to keep up with the country’s high demand for coal internationally.
According to forecasts from the finance ministry, the government anticipates mining royalties to decrease from 6.1 billion pula ($3.41 billion) last year to 4,5 billion pula ($3.41 billion) in 2023. The amount of dividends owed to the state would likewise decrease, from 15 billion to 11,3 billion pesos, in 2022.
A new list names the Jwaneng diamond mine, in Botswana, as the world’s richest diamond mine.
A new list by miningintelligence.com, quoted by IDEX Online, names the Jwaneng diamond mine, in Botswana, as the world’s richest diamond mine for the first three quarters of 2022. Jwaneng produced 10.3 million carats in 2022.
Orapa, also in Botswana, came second with 8 million carats. Both Jwaneng and Orapa are operated by Debswana, a partnership between De Beers and the government of Botswana. Jwaneng and Orapa were also listed as the two highest value diamond mines in the world, estimated at $1.25 billion and $976 million respectively, “based on average historic annualized prices of $121.5 per carat,” according to the report.
Alrrosa’s Udachny mine came third. Although Alrosa has not published production figures since the war with Ukraine, miningintelligence.com bases its conclusion on the mine’s 2021 production of 4.6 million carats. Fourth comes the Venetia mine in South Africa 4.6m carats, operated by De Beers. In fifth is Nyurba, in Russia, with 3.6 million carats, based on 2021 numbers.
Sorting a parcel of rough diamonds Gaborone, Botswana.
De Beers lifted prices of smaller rough at this week’s sight, its second consecutive increase, as the industry continued to express concerns about a perceived mismatch with polished.
Goods weighing less than 0.75 carats saw price hikes of around 5% at the February sale, while larger items were mostly stable, sightholders and industry insiders told Rapaport News this week.
The latest adjustments follow a strong US holiday season for retail and come amid robust demand in the polished sector while the industry restocks. Rough prices have rocketed in recent months, reflecting this appetite as well as supply shortages.
Prices at auctions and tenders have risen even more strongly than sight goods, with traders enjoying unprecedented premiums when reselling De Beers boxes on the secondary market.
However, manufacturers’ margins have suffered. This was a major point of discussion at the Dubai Diamond Conference, which took place Monday.
“There is still some buzz, but people are very cautious now because they’ve understood that prices have hit the ceiling and [De Beers] is facing resistance now with the new prices,” a sightholder said Tuesday on condition of anonymity. “There will be some stability and there has to be some mindfulness, because rough prices are outpacing polished prices so anyone who buys rough at those prices is not going to make a profit.”
The increases at the February sight followed sharper hikes in January, when rates jumped by up to 15% in the smallest categories and by 5% to 12% in larger sizes.
“What we try and do very hard at De Beers is price properly in accordance with demand,” De Beers CEO Bruce Cleaver told Rapaport News on the sidelines of the Dubai event. This is based on expectations of how the final polished will sell when it becomes available two or three months later, he explained. “Our crystal ball is no better than anyone else’s, but it’s based on a lot of data at the time that we make these pricing decisions.”
China Sales ‘Average’
Meanwhile, sales in the Far East during the recent Chinese New Year were steady, producing figures broadly in line with last year, dealers reported. This came despite headwinds in the latter months of 2021, including fresh Covid-19 outbreaks, a real-estate crisis, and power shortages.
The unfavorable comparison with last year’s season of post-lockdown recovery also affected the numbers, while fewer consumers took trips within China — usually a driver of seasonal demand, Cleaver pointed out.
“There’s no question that people are not traveling as much between the big Chinese cities and coming into the big Chinese cities to buy as they might have been because of [Covid-19],” he noted, cautioning that the information was preliminary. “In a sense, it could have been a bit better, but the early data I’ve seen is that it’s been an average to reasonable New Year.”
However, store openings in the mainland’s tier 3 and 4 cities are progressing well, he said.
“I don’t think there’s any reason to think that will slow down, and our clients tell us that’s continuing to happen,” the executive added.
The February sight, the second sale of the year, began on Monday and ends Friday.
Botswana’s state-run diamond trader reported record revenue last year with sales surging almost five fold after U.S. imports recovered from a Covid-19 induced slowdown.
Okavango Diamond Company sold $963 million of rough diamonds last year, said Dennis Tlaang, a company spokesman. The revenue was the most since the company began operations in 2012, he said.
“The demand for natural rough diamonds remained strong throughout 2021 driven primarily by positive market sentiment in key markets such as the United States,” Tlaang said.
Sales may rise further this year after De Beers, the world’s biggest producer of the stones, pushed through one of its most aggressive diamond price increases in recent years. Okavango also got higher than normal prices in the sole auction it held this year, Tlaang said.
De Beers Implements Big Diamond Price Hike as Demand Runs Hot. A Buying Frenzy in Cheap and Tiny Diamonds Sends Prices Soaring. Diamond Sold for $12 Million in Cryptocurrency at Sotheby’s. “We believe this is a good indicator of the market dynamics of 2022, at least for the first half of the year,” he said. “The company will continue to drive customer participation by marketing its rough diamond assortment in key markets such as Antwerp and Dubai.”
Under a 2011 agreement between De Beers and the government of Botswana, Okavango purchases 25% of the nation’s annual production for independent marketing, while the balance is sold through the De Beers’ trading network.
62.7-carat fancy pink diamond “Boitumelo” in Botswana
Lucara keeps raking in the big diamond finds, this time recovering a 62.7-carat fancy pink diamond from its Karowe mine in Botswana.
It is the largest fancy pink gem to found in Botswana, according to the diamond miner, and one of the largest rough pink diamonds on record in the world.
The stone has been named “Boitumelo,” which means joys in Setswana.
Measuring 26 x 17 x 16 mm, it is described as a high-quality fancy pink Type IIa gem.
Lucara uncovered it from the direct ore milling at the EM/PK(S) unit of the South Lobe, the site of many of its biggest finds.
The company said a 22.21-carat fancy pink gem of similar quality was found during the same production period, as were two more pink gems of similar color weighing 11.17 carats and 5.05 carats.
Asked if those additional small pink diamonds could’ve broken off from the same piece as the 62.7-carat diamond, a company spokesperson said: “As the diamonds all came from a similar production period it may be possible, but we cannot confirm this at this time. Further detailed analysis needs to be carried out to confirm if they did indeed originally stem from one diamond.”
Regarding the find, CEO Eira Thomas said, “Lucara is delighted to announce another historic diamond with the recovery of the Boitumelo, and very pleased to demonstrate the continued potential for large, colored diamonds from the South Lobe production.
“These remarkable pink diamonds join a collection of significant diamond recoveries in 2021 produced from the EM/PK(S), which forms a key economic driver for the proposed underground mine at Karowe.”
