Recently in the last month, S&P Global had Lowered Botswana Rating. They understand falls In Diamond Revenue and Deteriorating Fiscal Position; Outlook Negative- S&P Global. To count diamond revenue, they analysed the global diamond market.
The global diamond market is undergoing significant structural shifts that pose a challenge to Botswana’s natural-diamond-dependent economy. Lab-grown diamonds have rapidly gained market share, capturing approximately 20% of the global market by value and up to 50% by volume in the U.S. engagement ring segment in 2025, reflecting changing consumer preferences that affect the under-two-carat mined diamond sector, in particular.
Concurrently, softening demand in key markets like China and the U.S., U.S. tariffs on Botswana and on diamond-cutting countries such as India, a shift in demand from diamond to gold jewelry, sanctions on Russian diamonds, as well as a broader weakness in global luxury goods spending, are all further depressing diamond sales.
The lab-grown diamond industry has expanded rapidly in recent years, and lab-grown diamonds can be produced relatively cheaply. Increasingly they are grown using renewable energy and then marketed as an environmentally friendly alternative to natural mined stones.
High inventory of natural stones among retailers and wholesalers, resulting from overstocking in recent years (partly owing to threats of sanctions on Russia), have also hindered more recent demand for rough uncut mined diamonds, creating a very challenging environment for the rough mined diamond industry.
Some of these factors weighing on diamond prices may prove temporary and cyclical–for example, tariffs may be lowered after negotiations, demand from China could rebound, and greater price differentiation between lab-grown and natural stones could support natural stones in the future. But this is not certain, and low diamond prices have persisted.
Given the structural changes in the diamond market demand, Botswana’s economy continues to struggle, as shown by the 0.3% year-on-year [YoY] contraction in the quarter ended March 31, 2025, following the 3% contraction in 2024. Diamond demand remained weak through 2024, leading Debswana, Botswana’s main diamond mining company, to cut production at some mines and temporarily close others.
For Debswana alone, the downturn since the second half of 2023 led to a cut in production by 27% to 17.9 million carats in 2024, compared to that in 2023. While sales experienced a rebound in the second quarter of 2025 after a substantial decline in the first (partly due to the desire to stock before U.S. tariffs took effect), overall sales for the first half of 2025 were down 13.2% compared with the previous year.
Debswana further plans to scale back production this year to 15 million carats–an approximately 40% decrease from its output in 2023–and is expected to maintain this general level of reduced production for the next few years, if global demand remains sluggish.
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