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Botswana’s diamond stocks are almost double target stock levels as prices continue to fall, The Finance Ministry said this severely limits the country’s ability to increase gemstone production and promote economic development.
The country’s economy is expected to shrink by nearly 1% in 2025, after shrinking by 3% last year.
The decline stems from a collapse in diamond prices driven by lab-grown gems and weak global demand.
Prices are forced down Debswana, a De Beers joint venture responsible for 90% of Botswana’s diamond sales, suspended production at some mines last year.
According to the Kimberley Process Certificate Scheme, Botswana’s production in 2024 will be 18 million carats, second only to Russia.
However, a Treasury document seen by Reuters showed that stocks would reach 12 million carats by December 2025, nearly double the government’s allowed stock of 6.5 million carats.
“This suggests that output is expected to remain broadly unchanged in the short term until stock levels approach minimum permitted levels, creating room for additional production,” the ministry said in the budget document.
Unless the non-mining sector performs strongly, limited scope for production increases will constrain the economy, the report added.
Diamonds typically contribute about one-third of Botswana’s national income and three-quarters of its foreign exchange earnings.
Botswana’s exports to the United States, including diamonds, now face a 15% tariff. The ministry added that higher tariffs on major diamond-consuming markets such as India could prolong the decline in gemstone prices and squeeze profit margins.
“This may spill over to mining operations. A slowdown in mining activities will reduce government revenue from the industry,” it said.
Botswana’s mining revenue is expected to reach 10.3 billion pula ($729.24 million) in 2025/26, compared with the historical average annual revenue of 25.3 billion pula, reflecting lower diamond sales.