In a recent update on the diamond industry delivered in Parliament, Lefoko Moagi, the Minister of Minerals & Energy, shed light on the challenges facing the sector, notably emphasising the impact of the growing demand for lab-grown diamonds as a significant factor contributing to its poor performance in 2023.
Moagi disclosed that his ministry is actively collaborating with multiple organisations to devise effective strategies to counteract the effects of lab-grown diamonds on the traditional diamond market.
The Minister underscored that the diamond industry experienced a downturn in 2023, marked by a persistent decline in prices throughout the year.
“This year was the worst in recent times and was even more severe and prolonged when compared to the negative impact on the industry during COVID-19,” he stated.
Despite the ongoing Russia-Ukraine conflict, Botswana’s diamond sales have remained largely unaffected. However, Moagi emphasised that the sluggish market was primarily influenced by an oversupply of inventory throughout the value chain, stemming from the buoyant period of 2021/22.
Additionally, the demand and prices for most diamonds experienced a decline and failed to rebound due to the underperformance of the US economy and the incomplete recovery of China’s diamond demand, which was hampered by prolonged COVID-19 closures.
Moagi informed legislators that the G7 nations have collectively decided to impose sanctions on Russian diamonds. Notably, as of January 1, 2024, Russian diamonds have been prohibited from entering G7 countries.
He voiced apprehension over the potential strain this regulation might place on Botswana and other diamond-producing nations. This imposition is expected to incur additional costs and prolonged shipping times for goods to reach customers, potentially resulting in unintended consequences due to increased expenses and delays, particularly for non-Russian diamonds.
Furthermore, a key concern lies in the limitations of tracing and provenance technologies. It’s anticipated that the global supply of adequate machines to meet the G7 timelines may not be feasible.
“Botswana hosted the G7 Technical Team and raised her concern and showed them the sophisticated, robust and well-managed processes. Botswana has since written to G7 to outline how she can work effectively with G7 to avert dire consequences to our growing economy,” he indicated.
