Business, Finance & Economics

Diamonds are forever?


JWANENG, Botswana — Diamonds — the glittering symbol of wealth and glamour — had retail sales averaging $9 billion dollars a year for the past decade. Many of the diamonds come from the rich earth of southern Africa.

But now in Botswana, where diamonds account for nearly 65 percent of the country's exports, the slowdown from the world economic crisis has prompted diamond mines to close, at least temporarily.

Botswana's Jwaneng Mine was the world's richest diamond mine and the second most profitable mine in the world, said Dale Ekmark, the mine's general manager. But after a 20 percent drop in demand for the precious stones mined here, Jwaneng closed this year for months.

Down in Jwaneng's 1,260-feet-deep pit, workers like 25-year-old Moitshepi Mosupi drive some of the biggest trucks in the world, loaded with diamond ore called Kimberlite. But given the decline in diamond demand, Mosupi's job is on the line.

Diamond demand has dropped as people around the world slash their luxury spending. De Beers, the world's biggest diamond producer, has experienced other setbacks as well. A massive blimp brought to the desert near Jwaneng mine to prospect beneath the sands of the Kalahari Desert crashed last year. And reports that De Beers planned to prospect in the San people’s homeland caused a wave of bad publicity.

The governments of South Africa, Namibia and Angola also earn a large share of their foreign currency from diamond sales in the coastal and ocean mines of northern South Africa, like these near Port Nolloth. These also face closures unless the low world price for diamonds improves dramatically, according to Moody’s Investor Service.

The fall in demand for diamonds prompted Angola to cancel a conference on ways to raise diamond output and improve the image of diamond producers. The World Diamond Summit, branded as one of the most important gatherings of diamond producing nations and companies, had been scheduled to take place in November in Angola's capital Luanda. Angola is the world's fifth biggest diamond producer.

"This decision is in line with the will of the international diamond community at a time when the economic and financial crisis is having a significant impact on the diamond industry," the Angolan government said in a statement.

Prices of polished diamonds have fallen 13 percent since reaching a peak in August last year, according to Polishedprices, an independent news and price list provider to the diamond industry.

The United States — which accounts for about half of world diamond demand — Europe and Japan have been hit hard by the global economic slowdown.

At the Botswana Diamond Valuation Company offices in Gabarone, Botswana, cutters sort through Botswana's production, which was once the second largest in the world.

Diamonds are graded by clarity, cut and color and that is used to place them on the market, but their value is not based on anything but consumer demand.

“Diamonds are forever” may be physically true, but in Africa today people like Motshepi Mosupi find that jobs mining them are not.

More GlobalPost dispatches from Africa:

Today blue is the color of money

Reviving Mozambique's crown jewel

Ululating for Carmen 


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In Business, Finance & Economics.

Tagged: Africa.