THE surprise election in November of Botswana President Duma Boko could result in “inappropriate sales” of diamonds from “a major competitor” being stopped in the southern African nation, said Clifford Elphick, CEO of Gem Diamonds.
Commenting in a presentation on Tuesday, Elphick said high value goods produced by the firm’s Letšeng mine in Lesotho were being undercut by a competitor in Botswana.
“We saw extraordinary result out of Botswana,” said Elphick of the election result in which Boko of the Umbrella for Democratic Change replaced President Mokgweetsi Masisi and his Botswana Democratic Party – the party’s first defeat in 58 years.
“For our particular business that may have an impact because we are in business of selling large diamonds and we have a view that some inappropriate sales out of Botswana negatively impacted our goods,” said Elphick.
One of major competitors … is selling goods in an indiscriminate way that is hurting us,” he said. “Hopefully, the situation in Botswana sorts itself so we don’t have people undermining prices at our end of the market”.
“We think that situation may, with a new Government, be reversed. It hasn’t yet happened but let us see,” said Elphick.
Toronto-listed Lucara Diamonds is renowned for recovering large diamonds at its Karowe diamond mine in Botswana. It markets goods of more than 10 carats through Antwerp’s HB Group which also has a strategic partnership with the Botswana government.
Lucara has been under heavy financial stress after unexpected geological problems led to a delay in the underground expansion of Karowe. Shareholders helped recapitalise the balance sheet but it came with then CEO Eira Thomas losing her job. William Lamb, who ran Lucara before Thomas, returned to the post last year.
In the company’s update today, Elphick said he had decided to ditch an underground mining project at Letšeng’s satellite pipe owing to poor market conditions. Instead, the company has approved another cutback in the open pit involving a steeper slope.
The project had low technical risk and would result in a cost-effective reduction in waste tons, although the sacrifice was a reduction in diamond-bearing tons.
The company, which is listed in London, has forecast 84,000 to 88,000 carats in production from Letšeng in the 2025 financial year, less than 2024’s production. Sales, which would also be lower year-on-year, were guided to between 82,000 and 86,000 carats. Operating unit costs however would decrease to between $232 and $242 per ton (2024: $255/t).
Shares in Gem Diamonds have fallen over 24% year-to-date as diamond market conditions failed to improve as initially expected.
Elphick said the immediate view of Thanksgiving polished diamond sales was that they were “pleasing”, but he cautioned it was too early to say definitively the market had turned. “It’s only 24 to 48 hours after Thanksgiving. Let’s see,” he said.
