Diamonds continue to glitter in the third quarter
The robust recovery in the production and sales of diamonds has continued in the third quarter of 2021, which bodes well for certain Southern African countries that are heavily dependent on diamond exports to generate foreign earnings and government revenues.
This is according to PSG Namibia’s research analyst, Shelly Louw, who added that the higher diamond earnings in 2021 will help to improve the fiscal positions of Namibia and Botswana following the sharp widening of their government budget deficits last year.
Diamond production in Namibia increased by 64.9% year-on-year to 400 000 carats, largely reflecting the suspension of a diamond mining vessel in the third quarter of 2020 in response to lower diamond demand at the time.
De Beers’s production of rough diamonds increased by 28.1% to 9.2 million carats in the third quarter of 2021, compared with a surge of 134.3% seen in the previous quarter due to base effects caused by the Covid 19 lockdowns in the second quarter of 2020.
In terms of rough diamond sales, demand for diamond jewellery has proven to be robust thus far in 2021 mainly thanks to buoyant consumer sentiment in the key markets of the US and China.
Louw noted, however, the outlook for diamonds in the remainder of 2021 and 2022 is mixed as it is expected that Chinese consumption will cool, while US and Indian consumption will remain resilient.
“China has lost some economic momentum going into 2022 due to a downturn in the residential real estate market, the impact of repeated Covid 19 outbreaks, and production cuts related to climate change targets,” Louw said. “Meanwhile, India’s government has continued to reopen its economy since the Delta surge started to dissipate towards the end of the second quarter which had boosted consumption, but Indian consumers are still taking some caution due to the relatively low proportion of the fully vaccinated. US consumer spending, on the other hand, is expected to be buoyant on the back of an improving health situation, reinvigorated demand for services, and stronger hiring.”