Botswana’s Debswana Diamond Company has announced temporary production halts at several of its mines due to sustained weak global demand for diamonds. The decline in market conditions, ongoing since mid-2023, led to a 27% reduction in production to 17.93 million carats in 2024 and a 46% decrease in sales revenue. A joint venture between Botswana’s government and De Beers, Debswana plans to further reduce output to 15 million carats in 2025. The company is suspending operations at Jwaneng Cut 9, Orapa, and previously halted activity at the Letlhakane tailings and Jwaneng Modular plants to cut costs in fuel, electricity, and materials. While long-term projects like the Jwaneng underground conversion will continue, some capital projects will slow down. Debswana has committed to avoiding involuntary job cuts, while offering voluntary separation. With diamonds contributing 30% of government revenue and 75% of foreign currency income, the downturn has significantly impacted Botswana’s economy, which contracted by 3% in 2024. The International Monetary Fund expects an additional 0.4% contraction in 2025.
The global diamond market has been in decline since mid-2023, influenced by factors such as the rise of lab-grown diamonds, which have become a strong competitor. This has impacted major companies like De Beers, prompting a renegotiated agreement, increasing Botswana’s share of diamond production. With diamond sales declining, experts urge Botswana to diversify its economy. The nation has a Pula Fund to invest surplus from gemstone sales, preparing for a post-diamond economy.
In response to the downturn, Debswana plans to seek funding from international capital markets to support its $6 billion Jwaneng underground mine project. This move comes as the company faces declining revenues and rising capital requirements, amid a downturn in the global diamond market since late 2023. Debswana’s managing director, Andrew Motsomi, stated at a mining conference in Gaborone that the company aims to extend the life of its flagship Jwaneng mine to 2054 through underground operations, with current open-pit methods expected to reach their limit by 2034. The company reduced diamond production by 27% in 2024 and plans another 16% cut in 2025 to 15 million carats. Historically reliant on internal funds or shareholder injections, Debswana is now pursuing an international credit rating to secure external financing. Annual capital expenditure is projected to rise from 5 billion pula to 8 billion pula over the next five years. Botswana’s Minister of Minerals and Energy, Bogolo Joy Kenewendo, remains optimistic for a recovery in diamond sales by 2026, noting early signs of market improvement in 2025.
The downturn poses a major threat to Botswana’s economy, which relies heavily on diamond exports for public revenue and foreign exchange. Diamonds account for approximately 75% of the country’s foreign currency earnings and nearly 40% of government revenue. In 2024, the economy contracted by 3%, and the International Monetary Fund now projects a further 0.4% decline in 2025. Finance Ministry officials have revised the 2025 growth forecast to zero, down from an earlier projection of 3.3%, citing weak global diamond demand and tightening liquidity. The budget deficit is expected to widen to over 7.5% of GDP in the upcoming fiscal year, raising concerns over public spending and delayed payments to suppliers. The country’s fiscal position is deteriorating fast, and structural reforms and diversification away from diamonds are urgently needed.
Botswana has signed a new 10-year diamond sales agreement with De Beers after seven years of negotiations. The deal increases Botswana’s share of sales through its joint venture Debswana, from 25% to 30% during the first five years and up to 40% in the next five years, with an option to extend the agreement by five years when sales would be shared equally. In return, De Beers received a 25-year extension on its mining licenses in Botswana, valid until 2054. This agreement is crucial for Botswana’s economy as diamonds account for roughly 80% of its exports and a quarter of its GDP. The declining demand and price for diamonds have significantly impacted Botswana’s economy, resulting in political changes and economic challenges. The agreement was prioritized by new President Duma Boko, who took office following an election that ousted the ruling party after 58 years.
In light of the current situation, Botswana’s government is expected to revise its 2025 economic growth forecast downward. While the country has made efforts to diversify—investing in tourism, copper mining, and financial services—diamond revenues remain central to its fiscal stability. The company says it will continue to monitor market conditions and adjust operations accordingly. As the industry reconfigures in response to evolving demand patterns, all eyes will be on how Botswana balances its economic dependency on diamonds with long-term resilience and growth.
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