The outbreak of the Covid-19 pandemic has shattered global demand for luxury goods, including Namibian diamonds. Kennedy Hamutenya, CEO of Namibia Dessert Diamonds (NAMDIA) said in the last quarter of the financial year, in mid-January, the diamond industry was severely impacted by the outbreak of the pandemic.
Hamutenya said diamond centres around the world closed their doors and diamond trading declined sharply in February due to the economic uncertainty created by the coronavirus.
”Manufacturers and dealers are facing a severe liquidity crunch, as sales to China and Hong Kong have stopped. Major trade shows in Hong Kong and Basel, Switzerland, have been cancelled and buyer traffic in the diamond bourses has declined,” he said.
With Chinese retail virtually at a standstill, the slump in jewellery sales means stores have more inventory than usual for this time of the year.
According to Hamutenya, this will result in a build-up of excess goods and cause a squeeze on liquidity among polished diamond suppliers.
Despite these challenges, NAMDIA performed relatively well during the 2019/2020 period.
In 2019/2020, the diamond market was confronted with several challenges, including increased demand for and purchase of laboratory-grown or synthetic diamonds, a reduction in rough diamond supplies, reduced diamond prices and a decline in sales of polished diamonds.
“Mining companies were left with a large amount of unsold rough diamonds. With the outbreak of the coronavirus and the resulting economic slowdown in China, diamond inventory levels are expected to rise again. This will impact the rough diamond demand, which in turn will induce mining companies to reconsider their production plans for 2020,” stated Hamutenya.
Amid weak demand, global mining house, De Beers, cut back on production in 2019 and produced 30.8 million carats, compared to the 35.3 million carats produced in 2018.
Production in Namibia decreased by 15% to 1.7 million carats, compared to the 2 million carats produced in 2018, mostly owing to planned routine maintenance at the company’s marine operation and the closure of the Elizabeth Bay mine.